The Wise and the Wary
Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
How to Dig Out of Debt, Part 1
Overspending and income levels are not necessarily correlated
At the end of 2008, the total credit card debt of Americans exceeded $972 billion. For those households that had a credit card, the average outstanding credit card debt was $10,679. Uninsured medical expenses, lost jobs, and other emergencies no doubt contribute to many Americans falling behind. However, overspending—otherwise known as deliberately living beyond your means—is a significant cause as well.
If overspending describes your behavior, the next few blogs are for you. Later postings will address approaches used for debt relief, no matter what the cause.
First, overspending and income levels are not necessarily correlated. Plenty of high-income earners are plagued with the overspending habit, while many low-income folks diligently save 10% of every paycheck, the most surefire way to avoid consumer debt.
Second, overspending can range from mild or occasional overindulgences to chronic or habitual behavior that rivals other addictions in its power to destroy lives. If the latter condition describes you, psychological counseling is needed. Trying to follow standard financial planning and debt management techniques on your own will ultimately prove futile and only waste time. Getting to the root causes of addiction and obtaining effective treatment of this behavior must be your first concern.
If your overspending habit is merely mild, I challenge you to do one simple step—lock away your credit cards for three months. I’m not suggesting anything extreme or permanent. This is just a temporary experiment. Try it now. Next week, I’ll discuss why this is simple but not easy.
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
