Why You are Broke...

...and Will Remain Broke Without Aggressive Action on Your Part

A few weeks ago, a U.S.A. Today article reminded us of what we already know. We are BROKE. And we even know why we are broke. It is nothing new. But we need reminded over and over.

earning less incomeONE. You are earning less.
In terms of inflation, a middle class income is not as high as it was 15 years ago.
When we look at middle class spending in 1999 and 2014, the middle class income was worth about $9,000 more in terms of spending power. Salaries are not keeping up. And it is VERY HARD to have a single income in today's economy. For the rest of your life, you are going to have to deal with this question: How do I maximize my capacity to earn. Any couple that chooses to have a one income family is going to deal wtih financial problems/STRUGGLES. That is just the way it is.

Key Question:  So how are you going to increase your income?  What is your plan?

 

TWO: Cost of living is up.
While this is true for everything, it is especially on the basics, the staples of life.
The things you can't do without. Things like FOOD, gasoline, housing, utilities. These core items just keep on rising. I talked with a friend in the food industry and he told me the bad news of escalating coffee prices. I have friends who are having sticker shock these days at the grocery store. It just costs more to live today (when you factor in all the variables then it did ten years ago). Prognosis - it is not going to get better.

Key Question:  So how are you going to be vigiliant about spending? What are you going to do without? You ARE going to make choices. It is inevitable.

 

consumerismTHREE:  Lifestyles are more consumption oriented than ever.
Now I am talking about the stuff we don't need but which we want.
This is the stuff that the advertising industry exists so it can make us salviate for new stuff, better stuff and more stuff. Whether it is first homes or the latest technology gadgets, or the cars we want - there is an instant gratification mentality. We want the really good stuff a lot sooner then previous generations. We are not willing to work for 20 years and then upgrade to a better house. We go for the one we want now. With extensive social media - comparisions are more painful then ever. 

I am on Pinterest and have a lot of fun with it. But, I am always astounded at the Dream Homes, Dream Vacations, Dream Weddings, Dream This and Dream That Board on Pinterest. Top shelf stuff at top shelf prices! We are homo consumerus.

Key Question: So how are you going to deal with the consumer, consumption mindset that always wants more? How much is enough? How much do you really need? (Be sure to read poing #5.) Are you ever going to wrestle with issues of simplicity and contentment when it comes to what you possess?
 

FOUR:  Student loans are killing young people.
I have a conversation with a friend who has been out of graduate school for many years now. He told me he has years (and years) to go until grad school is paid off. College has become so expensive that whether it is our first degree or grad work - we are going into major debt to get our degrees. That debt hangs over us for many long years and puts a HUGE CRAMP on our ability to afford the other things we want.

Key Question: If you have college loans to pay off - what is your aggressive plan for putting huge amounts of money toward those loans?


credit card debtFive:  Credit Card Debt.
This one is the no-brainer and it only makes sense that it is why we are broke
. Credit cards make possible our consumer lifestyles and for that matter, even buying the basics that are unaffordable. The problem is that credit cards come with a horrible price tag. That price tag is compounded daily interest. You are not only buying expensive things you can't afford. The interest you pay for what you couldn't afford makes those things even more costly. REALLY COSTLY.

The nice people at the credit card companies are only too glad to let you borrow their money and then pay them back quite a bit extra for doing so. Becky and I have been married for 30 years now. In those 30 years, we paid interest TWO TIMES. One time was because I misplaced a stack of bills and we were late on paying all of them. The other time - I forget why. So in 30 years we spent about $50 in interest! 

Key Question: What are you going to do to STOP USING CREDIT CARDS? What are you going to do to RAMP UP paying them off?

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One program our church is using is highly recommended. Check out Financial Peace University (Dave Ramsey). It is a comprehensive and aggressive plan to get you out of debt, to change your spending lifestyle, and to get you to a place of freedom and stability about your finances.

It takes work, but it you don't give serious attention to your Financial Resources and Income - you will struggle for the rest of your life. 


Brian K. Rice
Leadership ConneXtions International

BrianRice@lcileaders.org