Solve Problems

Having a debt problem not sure what to do to solve. It starts with identify what the cause then work to solve.

Article Link:
https://www.oklahomacentral.creditunion/Ten-Common-Financial-Challenges

Transcript

Charles McDonald: 0:03

Hello, I'm your host, Mr. Chuck, a retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination, solving problem, having a depth problem and not sure what to solve or what to do, it starts with identifying the cause and then work to solve. I'm gonna start out what were your goals in life, either now, or when you first got out of high school, college, trade, school, whatever you are doing, or you had goals to get a job in your chosen career, and then work up and tried to be the best she can to buy a nice place to live and have some transportation that nobody else has. Maybe that was your goals in life, when you were looking at graduating from your last level of school of whatever that was, whether it's college, or trade school, or just high school, it doesn't matter. Whatever you decide to do, what were your goals in life? And where are you today? And how long has it been. But the reality of most likely was, what is something along these lines is a career that you chosen to go into, either doesn't pay a whole lot, or there is no job openings in the field, or a combination of both. So you end up creating more debt, because you you had school loan debt to start with, then your field that you chose didn't pay as well as you hoped. Or he was unable to get that higher paying job for whatever reason. And you end up living off some credit cards, or use credit cards more often than what you should have. And now you got yourself into a debt problem. So you can't finance nothing. It's hard to get loans, you're paying more for insurance because you got a lot of debt. And everything is not looking so good. So what do you do? I'm gonna start out by lists identify the problem first, you cannot solve a problem. Until you know what the problem is. You identify the problem, then you figure out ways to solve it. There may be more than one way. And then you take action to do whatever your plan. So let's give you an example of something not financial. But you live in an apartment and you pay rent, you notice that your sink, he got a leak underneath your sink. So what'd you do? You looked on the sink and figured out where the leak was coming from? And you probably put something under it to catch the water. What's the next step? That is identifying a problem and finding out where it was? But how do you fix it? Well, if you're a rent, it's you got to you can either fix it yourself is something simple you can take care of. Or maybe you make a phone call and call a landlord who sends a plumber in to fix the problem. That's a problem was the leaky leaking plumbing. He identified where it was and you took action calling the landlord to have come in and get a fixed. It's the same thing with personal finance. What is the problem? What is holding you back from achieving your goals today? Maybe your goal is to build up a downpayment so you can afford a home and an area that you want to live maybe your family lives in that area. Or it's just an area you like for whatever reason. And you've been struggling for 10 years and you yet to get even 5% saved up. So what's the problem? The problem is you're not saving enough And that could be either your income is not high enough, or you have too much debt. Too much debt is eaten up your monthly income so you're not able to set some aside. Well, how do you go about solving that? And that's what we're here to help you with. But let before we get into that, for the 10 common financial challenges that most people have, few people are lucky enough have no experience for us financial issues, I have had financial issues most of my life. In fact, many, many of us face the same struggles and challenges when it comes to building financial security, saving money and adjusting to major life events. Whether your personal finances are temporary worry are a constant source of stress. The good news, the good news is that you don't have to face these issues forever. For every financial problem, there are solutions that can help you adjust your financial strategy and improve your ability to save for the future. Here are the top 10 Problems US consumers face, and expert approved ways to overcome these obstacles, monthly spending exceeds income and number one, how can you spend more money than what you make is called credit cards. As Carl borrowing money you don't have many consumers struggle with the basic challenge of having an income that doesn't cover their expenses. The first step to overcome this obstacle is to set a monthly budget that categorize expenses to rein in excess spending. That's your problem excess spending. But depending on the gap between your monthly income and your financial costs, you may need to consider getting a second job requesting to work overtime, or seeing if your employer can give you a raise or which is not in the article, find a better job in your career field change employers. Number two, he can't get out from under car payments. Car payments, eat up spare income every month. If you're reasonably upgrade your vehicle, you might feel like you're always making car payments but never make but now are paying your vehicles off. By changing the way you approach your car purchase, he can reduce your losses and minimize the cost of car payments. One way to reduce pain car payment that is to buy a used car, which comes in at a lower price and depreciate slower than new vehicles, then when you go to trade in that car, you have a greater trade in value, and your new car payment will be smaller as a result. So if you buy a used car, generally you're not going to pay new car price. So you finance less money. And if you have any type of down payment, it will be a larger down payment. So even though the interest rate is higher on a used car loan, with a bigger down payment, you will be better off in the long run. Because that car if you're gonna keep it for two years, and it's gonna lose less value over the two year period because you already lost most of the value before you purchase the car. Then when you trade it in, you're gonna owe less on it. So the payoff will be less, which gives you a larger down payment on the next use vehicle you buy. Stay away from buying a new car brand new car because it is a depreciating asset and it's not a good investment over the long term. It will cost you money in you will lose a lot of money. Number three, he carry a credit card balance every month. Credit cards charge high interest fees on any bounce carried over from one month to the next. As you reevaluate your budget and rent work to reduce expenses. Make sure your income is also to pay off the credit card balances every month, saving yourself from fees that push you further into debt. Additionally, consider exploring options to transfer high interest credit balance to cards or as lower rates or explore debt consolidation plans to streamline your payments. Building Have it a responsible credit card use and timely payments can significantly improve your overall financial health in the long run. When they say timely payments or meaning timely payments that pay off the balance, any credit card you carry a balance on is a no no, and it's gonna cost you a lot of money, and it's going to eat into your budget, thus, getting you to the point you are spending more than what you make. Number four, you don't have an emergency fund. Life events like loss of income car breakdown, hospital visit, or other unforeseen events can put consumers into a hole if they don't have an emergency fund at their disposal. Even a font of$1,000 can save and can save you from having to take a credit card interest, or open a personal loan, dedicate part of your monthly budget to save for this emergency fund. Even as even contributions of $50 a month can add up quickly, creating a buffer that will come in handy when a rainy day hits. That is very important to have an emergency fund. And all your plans have life financial plans. That is, and I've talked about it extensively in the past, your rank keeps going up. rising rents across America pension consumers budgets and many consumers find themselves wondering if it takes makes more sense to buy instead of rent. Well, there are a number of things to consider including your household income, and your willingness to stay in a purchase home for at least five years. It's worth looking at, for rent versus buy calculator or talking to a financial advisor to determine whether buying can save you money and start building equity in a real estate property. This depends on where you live. If you live in a big city, say New York City, you're not going to be able to afford to buy anything most likely. So you've got to be rent. There are some areas where renting is actually cheaper than buying because the cost of the homes. So that has to be taken into consideration. But as a general rule, when you're buying your home, you're building equity, you're paying rent to yourself, think of as this you got a mortgage payment, you're paying that mortgage payment. And as you pay it, what you owe is going down over time the value of the house is going up because it's real estate. So you're building equity, I call that paying rent to yourself. And one day down the road, you're gonna sell that home and get your money back and why you're paying their mortgage, especially early in the mortgage life. You've got mortgage interest and real estate taxes, which are a income of federal income tax deduction, where it's going to lower your income tax and how to offset some of that cost. Six new baby brings unexpected costs well now that could be expected. Children are expensive. Every day. Allied items like diapers or formula baby food can stress monthly budgets and checking accounts, even before new parents face the cost of daycare and other unavoidable expenses. Before having a child plan ahead and start saving in advance. It's what it says you owe the hospital for medical care. Well, you had a baby you went to the hospital. Medical bills can be a significant financial burden, especially when you're someone who doesn't have insurance or you do but a high deductible plan. But here's hospitals who used to deal with patients who can't afford to pay their bill in full. So take advantage of your options to reduce the cost and spread it out over time. Set up a payment plan with the hospital. Some hospital for example, willing to reduce the amount owed in order to get payment. And many are willing to talk about payment plan that lets you slowly chip away at your bill over time. These options could help you pay off your debt in a manner that doesn't destroy your personal finances. Never ever pay a hospital bill with a credit card. Never don't pay a doctor with a credit card. Because if you use a credit card, you're not going to get it it's not going to get written off. They're not going to be willing to do a payment plan, work directly with the hospital for its expenses and then work directly with each individual doctor that you get a bill from for their cost. My plan when I was had met Go bills, I always paid the doctors first because they are people and they provided me a service. I paid the hospital last. They provide the building and the place for the doctor to work. And lot of those services are marked up greatly. I basically just set up a payment plan with the hospital, they want copies on my tax returns, I send that in no big deal. I made payments for a period of time. And then they quit send me a bill, they wrote off the balance I made, he may paid for it for a year 50 bucks a month three or $600. And then the rest of it was gone. And I owed a couple 100,001. I mean, the surance paid some of it. But I still owed us a lot more than what I pay, and it disappeared. So I was happy. So work directly with the hospital, maybe the you have the same luck I did. Student loans. Your student loan debt limits your financial capabilities, go go wander large student loan debt can the man payments that lend me ability to buy a home or increase your savings, but delaying the payment of the debts only resolved and paying more interest over time, consider taking whatever approach to debt reduction to help you meet your goals. borrowers have the option to refinance at a lower rate to reduce the amount of where they can increase their monthly payments to pay off debt faster. Either pros could alleviate your student loan burden while creating opportunity to rebuild your finances. Maybe you're waiting for the government to give you some student loan debt relief. And if you haven't got a yet, you're probably not gonna get it. That's all I have to say about that, you probably don't qualify, because every time they say, Oh, hang on, I'll pay off student loan $10,000 A person. But when it comes down to them actually doing it, there is a certain specification that you must qualify for. And 90% of the people never qualify for whatever that reason is. It's limited to a very limited, certain university certain colleges that went bankrupt, and things like that, or you have to work in the public sector for 10 years. And you have to make your monthly payment timely for the whole time. And if you miss one payment, you're not going to get any debt relief. You're not saving enough for retirement or you're not saving at all for retirement. Many US consumers are worried they're not saving enough for retirement. But it's never too late to start catching up if you hadn't maximized contributions of 401k. Put as much tax deferred money as possible into the account. And be sure to maximize matching, you feel overwhelmed by financial matters. Personal Finance is a complex subject, but it has implications that will affect you the rest of your life. If you're feeling overwhelmed or confused by your own financial situation, is worth the time and money to take a financial literacy class. Your local credit union may have additional educational resource to help you better understand your finances, and what you can do to overcome financial challenges. If you are somebody who your parents never taught you anything about finances, or even just what the value of the dollar, you have no concept of these pair of shoes costs $100. In order to get $100 I had to work five hours at $20 an hour to buy one pair of shoes probably have to work more than five hours because you got to pay income tax on that money to have the $100 to buy that one pair of shoes. You got to get a feel for the value of money. And what does it take to earn X amount of money. So if you have a spending problem, if your income if your spending is exceeding your income problem one, you have a spending problem. There's only two things you can do increase your income or reduce your spending. The easiest one of those two is to reduce your spending. Now Yamane got yourself into a situation where the minimum amount you can spend is eating up all your monthly income because you have a problem. What's the problem he needs identified the problem? What's eaten up most Have your monthly income, look, do some tracking and figure it out. Maybe it's a combination of rent utilities and your credit card debt. Maybe it's enter too much entertainment, or you're dining out a lot. Maybe it's this, because you bought an automobile that you can't afford, he bought an automobile is costing you$2,000 a month. And your take home pay is $4,000 a month, and you pay rent of $1,500, you have$500 to pay your utilities buy food and entertainment. And you end up putting things on a credit card. And then when a credit card comes due, he don't have enough disposable monthly income to pay it off. So you carry a balance. And now it's costing you even more. And that's been going on for the last six months or a year. And it's getting out of control, you're getting way too much debt. I'll be back in one moment with my final thoughts are the articles I referred to, in my episodes, have a link in my show notes. If you're interested in checking out the software that I personally use to get my demo control, it's in my show notes under shop financial, you need to copy and paste the link. And it will take you to the website can have any questions, you can just contact me through that particular website. If you value this podcast and I like to make a contribution, I had a contribution link in my show notes also, give whatever you feel is appropriate for the information I am providing. I thank everyone for listening to my podcast. Okay, so now you know that you got to identify the problem. And maybe you have more than one problem. You could have multiple problems and one not aware of it. Maybe you thought you had one problem. And as you look through your finances, you realize I have multiple problems, how what am I gonna do? You got to one identify the problem as a two low income? What's the reason for it? What can you do to fix it. So I have too much debt. And my spending exceeds my monthly income. What's causing that? Maybe it's you have too much credit card debt. And he add up all the minimum payments of your credit cards. And then you take all your other needs expense, housing, transportation, some food, some clothing, take that in consideration. And you're spending more than what you're making a month. But if it's your credit card debt, your housing, transportation, housing also includes utilities and everything else involved with that. Transportation includes your car payments and the cost to operate the car. So if those two categories in your debt is more than your monthly income, then all the food you buy, you're basically buying on credit, even though you're paying cash, but to credit your credit, come in somewhere that money is coming from somewhere somehow. So just look at it. All the food I'm eating, I'm buying on credit and I can't afford to pay it off every month. I have a problem. What am I going to do? Okay, identify the problems now find a solution, Income Solution, maybe a second job, maybe a side hustles are self employed of some sort, or find a new job that pays more income, or work over time, things like that. Spending too much, too much debt? Well, the first thing is quit making extra payments and all that make the minimum payment on all your debt that's going to help you a little bit. But take that little bit that's helping you start your emergency fund, because that's probably a problem. Have you ever in the past had something happen that you couldn't afford to pay for. So you put it on a credit card and you're unable to pay it off. And maybe you're still paying for it. Whether you got a flat tire on your car, the water pump goes out whether it's car repair, whether you had an accident and got injured hospital bills, lost your job for a certain length of time, say two weeks or something and And you'd lost your income, you had to use credit to get by, for whatever happened. And that's not good, you need an emergency fund, and your emergency fund should have a minimum of $1,000. And build it up to a maximum of anywhere from three to six months worth of living expenses. The more you have, the longer you can go, and if something bad would happen, and it's not, if it's gonna happen, it's more of a matter of when it's gonna happen. Because over your lifetime, you're gonna have something happen, that's gonna be considered an emergency, an emergency is some unforeseen event that causes you to pay out some finances. When a hospital accident, a car accident, a car accident could be both the car and the hospital. Remember, insurance might pay for some of that. But they hardly ever pay 100%. And they're slow unpin you might have to pay the bill up front, and submit why you paid to an insurance company. So you need an emergency fund to cover things like that, so that you're prepared to go forward. Without putting a undue stress on yourself when something stressful is happening. Take the financial stress off yourself by having the emergency fund unplanned for baby Well, things happen. Even a plan for a baby. If you're gonna have children II got to know before upfront, children are not cheap, you got hospital bills, you got doctor bills, you got daycare, you got food, all those things over time accumulate into a pretty big pricey amount. So if you can go into it with some money upfront, they won't last you forever to get you by the first year, year and a half, he gets a couple pay raises in your set. You know what I'm saying here? It's not gonna last forever, but it's gonna help you at the very beginning. Take less stress, obviously, you can have that happy family that you're hoping for. Keep listening to this podcast. The next episode, you set up your goals you know what you want to achieve in life. If identify some of your problems, I'm gonna help you solve work towards solving your debt problem. You need a debt reduction plan. I've talked about it in a past but the next episode, I'm going back to it. The more times I talk about it, the more I talked about I add new stuff. Maybe they update things I don't know. But the more you hear it, I dread to drill it into your brain. Repetition is a good thing for you to know how to take care of paying off your debt. Have a plan and you'll be glad you did so