Millions of American households are behind the eight ball when it comes to excess debt. It might surprise some people to learn that even those with high earnings are not exempt.
The ability to pay one’s debts is not always a matter of earning enough money. Many of those in debt feel that the next pay raise will solve their debt problems. This is rarely the case. Debt control and money management are more a matter of attitude than of income level. If you can’t stay out of debt when your income is $60,000 a year, the chances are you won’t do any better at $80,000 a year unless you change your spending and saving habits.
A typical person with debt problems will have about four to six different credit cards and owe anywhere from $5,000 to $80,000. All of these debts require monthly payments, and many of them are at interest rates of 18% or more. If you are not paying off the entire balance of your credit cards each month, you may be a candidate for debt consolidation and possibly debt counseling.
Before you enlist the help of others, review your spending habits. Go through the past twelve months of your credit card charges and cancelled checks. See what items you could have lived without. Perhaps the $100 gift for a friend could have been a nice card or a $30 lunch date. A pass through a year of your spending habits will be very educational. If you design a budget (one you can actually live by) for future spending and saving, you may be your own best counselor.
It is difficult for many of us to admit that we need help with our finances. You may not be able to discuss your problem with your friends, relatives, or co-workers.
David Compton is a
Certified Public Accountant with offices in Meridian and Birmingham, Ala.
Business
Even high-earners can suffer from excess debt
- Business
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What’s your emergency fund range?
Dear Dave,
In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?
Amanda -
Remember ‘nanny tax’
Though it hasn’t made headlines recently, the nanny tax is still around – and it still applies to other household workers in addition to nannies. Here’s what you need to know.
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Highlight these tax dates on your 2012 calendar
Get out your red pen and circle these dates on your 2012 calendar if any of the following upcoming tax deadlines apply to you or your business.
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RMD precautions and options
After you turn 70, the IRS requires you to withdraw some of the money in your retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).
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Getting off on the right foot in 2012
Every year brings some financial change, so here are some relevant changes relating to investment, tax and estate planning for 2012.
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Hold your investments where taxes will be lowest
How much does it matter whether you hold your stock and bond investments in a taxable account or a retirement account?
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Congress extends payroll tax cut for employees
In the end, the Democrats and Republicans in Congress agreed to disagree. Before adjourning for the year, the feuding factions were finally able to set aside their differences to temporarily extend the “payroll tax holiday” for two months.
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U.S. stocks held up relatively well in 2011
2011 had a definite downside. Statistically, 2011 may end up being characterized as the year stocks stood still: the S&P 500 lost .003%, its smallest year-over-year change of any kind since 1947.
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John McRae named one of the Nation’s Top 50 Bank Reps
Bank Investment Consultant (BIC) magazine has named John McRae to its 2011 list of Top 50 Bank Reps. McRae is a Raymond James Senior Financial Advisor located at Citizens National Bank in Meridian.
- ’Tis the season for charitable giving
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What’s your emergency fund range?
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