In a Pew Charitable Trust report, roughly 80% of Americans are in debt from mortgages, student loans, car loans, and credit cards.  As a matter of fact, credit card debt is second only to mortgage.  As many as 40% of us have credit card debt, and 65% carry a balance every month (revolving debt).25  The average credit card’s interest rate is 15%, according to  Consider this example:  If we had a credit card with an Annual Percentage Rate (APR) of 18%, and a $5,000 outstanding balance,  the minimum payment requirement is around 2.5%, or $125.  You think that this means $125 x 40 payments = $5,000, which means in about 4 years the debt will be paid off.
This is the real shocker: keeping on the minimum payment schedule, that $ 5,000 actually would take 273 payments…over 22 years!
Credit card companies keep the minimum payment schedules low, so that they can collect on that interest for as long as possible.  And as the balance is coming down, the minimum payment becomes even less.  It’s one of the major ways that lenders make money.  Also, by hoping that many of us will only make the minimum payment, it helps people rationalize the debt: “This $5,000 charge is only going to cost $125 per month, so we can afford that!”  Ironically, that $125 payment only reduced the balance by $50, because the other $75 went to paying interest fees.  This means that over the long term, 60 cents of every dollar goes towards interest! We would pay more in interest than what we had originally charged. Consider that the same $5,000 credit card balance, making only the 1.5% minimum payment every month at 14% interest, would take almost 61 years to pay off because the interest would add almost $16,000 more to the debt over that time.
Regardless of the interest rate, we would save a significant amount of money by paying off our debt. Americans should be sprinting to the finish line to get out of debt  We’re trying, we’re pushing, and we’re paying–but it seems like we’re going nowhere.  What’s even more frustrating is that we are doing the right thing by paying down our balances on time, but we aren’t seeing any meaningful results.  The potential problems can only intensify, because many of the credit card companies award us with increased credit limits rather than keeping us at a limit we can afford to pay off.  By increasing our credit limit from $5,000 to $6000 or maybe $6,500 they hope we will charge more.   It’s a psychological boost because we think, “they feel so good about me, that they gave me more credit.”
Unfortunately, according to, many people will spend this credit increase immediately, adding 10% to our existing credit card debt on average. It’s important to remember that whether it’s a credit limit increase, a pre-approved card in the mail, or some incentive to charge more, we control our credit decisions.  We can ask that our credit limit isn’t increased, rip up those cards and applications that come in the mail, and don’t need to take advantage of any special offer. “NO” can be a great way to stay out of trouble.
Credit cards can be a great convenience, and provide some great perks, but they should be properly managed.  It’s important to remember that card providers are actively looking for customers, because we are a revenue source.  However, you should know some of these key points when using credit cards.
1. Know your credit score. The better your credit score, the better card deals you can get. 2. Using the web to help search for credit cards that fit your needs can be very useful, such as or  However, applying for a lot of cards can also hurt your credit score. 3. Beware of annual fees, hidden charges, or additional costs for being late or missing a payment, and cards that offer rewards–the later can be more expensive. 4. If you have trouble making payments on time, steer clear of card offers that give you a low introductory rate, but skyrocket if you make a late payment. 5. Don’t max out your accounts, as using too much credit can be a negative. 6. Cancelling cards that you no longer use can actually hurt your credit score if closed too soon. 7. Avoiding credit altogether doesn’t allow card companies to view your credit history. 8. Don’t lie on applications, Not only is it illegal, but also qualifying for a larger credit limit than you can handle could cause additional problems. 9. Co-signing credit cards or loans for someone else can hurt you.  In 2016 reported that 4 in 10 co-signers ended up losing money, or it hurt their credit.


When it comes to our financial well being, the one thing that has ruined more people and causes the most stress is DEBT! This may be the nastiest 4-letter word in the financial world. It’s a silent killer and the emotional toll that debt causes is devastating.
Regardless of our income, taking on debt can be a problem. We only need to remember the financial meltdown of 2008 to know why.  Most people think that 2008 was caused by the greed of Wall Street, lax Federal regulations, corrupt mortgage lenders, or the banks, but it really had more to do with many of us being so overextended.  We were taking out loans for 100% percent of the home’s value, overstating incomes, and thinking that things would just keep going up and up.  Taking on a bunch of debt seemed like a good idea because we would just sell our rapidly appreciating house to cover it all.  It wasn’t sustainable, and at the first sign of weakness, all of it came crashing down!  It was the worst economic disaster since the Great Depression of 1929.  Consider the consequences from all that debt in 2008:
1. Real estate lost over $4.2 trillion dollars in value, with over 4,000,000 Americans losing their homes. 22 2. The stock market lost over $11 trillion, and the average American lost 1/3 of their net worth. 23 3. By 2010, 46.2 million Americans were living in poverty, the highest number ever recorded in 52 years of publishing that report. 24 4. 8.8 million jobs were lost, resulting in over $19.2 trillion in lost incomes. 5. Fannie Mae, Freddie Mac, Shearson Lehman Brothers, Countrywide Financial, Bear Stearns, American Home Mortgage, New Century, Washington Mutual disappeared, and bailouts saved companies like GM, Merrill Lynch, and Chrysler.


It’s important to mention that comparing our finances to someone else, or against some benchmark, is financially depressing and destructive.  We should focus on our situation and what’s best for us. There isn’t a magic bullet, or a one-sizefits-all solution.  Also, looks can be very deceiving. “They drive a nicer car, so they must be doing better financially!” or “They have nicer things, so I obviously don’t make enough money!” Chances are that we make inaccurate assumptions because we are unaware of their financial situation, how much they earn, or how they are spending it.  We must focus on budgeting as a process; it’s taking baby steps to finally being able to walk.  Measure success by the little things, the little victories, the fact that you were actually able to put away an extra $5 or $10 this month. Don’t make the mistake of focusing on what others have or think.  It’s the emotional excitement, the psychological well being and the fact that you are in control of your finances that has the biggest impact. As a matter of fact, a 2016 Wall Street Journal article states that research has proven, “Having more money in the bank makes people feel more financially secure, which can lead to further happiness.”  WSJ went on to suggest that even the very wealthy felt much happier with money in the bank, not their aggregate net worth on paper.  The wellness concept is growing exceedingly popular; that sense of physical, emotional and financial well-being.  Feeling better about our finances is a big part of the equation, and budgeting has been proven to improve our ability to plan and save.
If budgeting can do all of this, then why wait? Do we want to make excuses, or do we want to do something about it?


How many people have ever used a GPS, MapQuest, or a phone for directions? You probably used this technology to find the best route to get where you wanted to go.  Now, imagine that you are trying this same process with your money, looking for directions, and trying to understand where it goes.  We call this budgeting, or the technical definition:

“The process of creating a plan to spend our money that allows us to see how you are actually spending your money.”

According to, at its basic level, “Budgeting balances your expenses with your income.” What’s really powerful is that by seeing where you’re spending your money, it makes you aware of what’s going, shedding light on why you might feel financial stress.  However, budgeting is one of the easiest tools for managing your money. It can save lots of headaches from overspending, and can help us stay out of debt. Additionally, you might see expenses to cut back on, how much is being wasted on interest from debt, or make a potential savings plan for a future purchase.  With a budget, we have a very effective tool in keeping our spending plan on track.  This is the cornerstone to financial well being, and offers many other benefits:

  1. It allows us to see what our financial priorities are and how we choose to spend our money, and can help us decide what expenses are really important, what we can reduce, or adjust. Ask yourself: “Do I really need this?” 2. Helps us to organize our savings, plan for future expenses, and helps us to save for the unexpected-those things that can easily throw us into debt, or cause enormous unnecessary stress. 3. Because we can see the whole picture, it can help determine whether we will have enough money to meet our needs. 4. By studying our budget for 3 to 6 months, it can help forecast our finances in advance and identify any potential pitfalls. 5. Most importantly, it can show us money that we are wasting, which can be redirected elsewhere.  It’s not uncommon to find as much as $200, $300, or even $400.


Does a dollar bill really care about us, or should we be caring a lot more about where that dollar bill is going? We showed the power of lifetime earnings, and the large amounts of money that we can make over our lifetime.  With our relatively high incomes compared to the rest of the world, why do Americans have such a hard time saving?  There are lots of reasons, but maybe you fall into one of these categories:
1. The word “budget” sounds very confining, has negative connotations, or scares people about what they might find.  Maybe it’s a sense of guilt, or the fear of failure if you don’t succeed. 2. Researchers have suggested that many of us are addicted to spending, we “feel better” when we buy something.  Maybe by watching how your parents or friends have spent their money, it justifies you spending it. (The Blame Mom and Dad theory).  I work hard, so I have earned “the right to spend it.” Or, to keep up with the latest and greatest gadgets. Or, I’m out having fun, so why worry about the costs! 3. Budgeting is just too much work, like brushing our teeth late at night when we want to go to bed or having to mow the grass, when we just want to relax.  Laziness or procrastination rule the day, because it’s easy to pass the blame for not doing it. 4. Budgeting is for everyone else because “I know what I’m doing, or, look how successful I am! Or, why do I need a spending plan?”  I have heard people brag how successful they are, so they will just make more money to fix their financial problems when they have them. 5. My wife and I will just fight over this; it won’t go well.  We won’t agree on things, or what’s important to her, isn’t as important to me. 6. Finally, one of the biggest reasons people don’t do budgets: “I Don’t Know How!”
Excuses are easy and most of us have used them.  However, with the points mentioned above, what are the consequences of not budgeting or taking action?  How much fun is stressing over money, or worrying about debt?  One of the biggest causes of divorce is failing to discuss money issues with a spouse, or making purchases selfishly.   Before spending money, we must ask ourselves, “Does it really feel good to have made that purchase?”  Is budgeting really confining, or limiting–or can it actually be liberating?  If we knew where we were wasting money, could we plan our expenses better?  Is it really that hard to budget?  Finally, does procrastination and laziness actually solve anything? Ask yourself: if my spending and debt were under control, would I feel better?