Money Mondays: The Futureshock

The future will mirror the present, until your present action, takes steps toward future results.

Most of you that comment here regularly are the exception to the rule. You have to be. Based on your responses, I can tell that you are smart and you take the steps you are supposed to take despite the staggering number of indebted Americans that live amongst the population. But what about those that don't comment or aren't doing o.k., what can they do to begin to turn it all around?

Take the appropriate actions now that will give you the desired future results.

Most people are generally optimistic about the future, especially when they are young. It's not uncommon to feel like jobs will get better, salaries will increase, you'll gain a spouse and another income, or some event will occur that equates to more money and better days. For the most part this is the American train of thought. This isn't a bad thing, but what this type of attitude does is give you an excuse not to be vigilant about changing your future now. It also doesn't prepare you for the day that either none of this happens as expected or it does, yet you still find yourself in the hole.

The numbers don't lie, for years Americans have been saving less while debt has been on the rise. Now with the basic living expenditures continuing to rise, Americans are finding themselves in a pinch and contrary to popular opinion, the future will not take care of itself. If you don't change your behavior now in favor of the future, you will continue to experience your present state of being when the future arrives. Either that or things will be worse.

The future two-step

Step 1. Put your guard up.
Repeat after me - Credit cards are not for emergencies. The company responsible for selling the American public onto that idea made a mint. Credit cards are tools for sucking up future wages, plain and simple. You use the card now because you can't afford not to, thereby you pay later for what you need today. Because of bad spending habits, most cardholders usually don't have enough credit limit available to take care of an emergency if one presented itself. So, the reason for getting the card in the first place has been negated. So if you told yourself that you needed a card to handle emergency's, tell yourself the truth -- All I need to handle an emergency is a well funded Emergency Fund.

So the first thing you need to do toward preparing for the future is to stop spending future income. A great step toward doing this is to start an emergency fund by setting a goal to put aside $500 to $1000 in the event of a real emergency and use those funds as opposed to a credit card. Eventually you will need to add more to your emergency fund, but $500 to $1000 is a good place to start. The only other thing you need to do is to define before hand what constitutes an emergency so that you aren't hitting up your emergency fund like you did when you swiped your credit card.

Step 2 - Get to slicing
Once you have bought into the idea of an emergency fund, the follow up move is to cut up those credit cards. If you aren't up to that step just yet (some of you will find you can't fathom the thought) try placing your cards into a ziplock and fill the container with water and freeze them. In this manner, you ween yourself from being able to swipe them so easily.

The quickest way to affect change on the future is to stop spending future income now.

Questions? Comments? Criticisims?


i.can't.complain. said...

wish i'd read this like... 4 yrs ago

damn credit cards

i hate that i love them

well, maybe loved

past tense


Rich said...

Yeah, they can be such fatal attractions.

Lovebabz said...

Good info!

I love that you are thinking about folks who perhaps are feeling like this whole monetary conversation is not for them. Trust me as someone who has been financially up against the wall lately...well you know my story (smile) I am glad about supporting those that think because they don't have x dollars that they are not in a position to make some fiscal changes in their lives. No matter where you are economical there are things you can do to build wealth.

Thanks Fitzgerald...knowledge is indeed power!

The True Urban Queen aka Sharon said...

This comment will be off some.
I think credit cards and home equity loans are two of the worse things people can do to themselves.
I recently met a man who made me feel like crying. He was trying to explain how he used his home equity to pay off credit cards (I think that is a big no-no) and for purchasing a few things and so on.
Now he was behind in paying the loan. And probably wouldn't have the current month payment either.
Having bad credit and losing your home = real heartache.

Mizrepresent said...

This is REAL talk, an i am working on getting rid of all those bad boys (credit cards)...i refuse to be slave to debt any longer!

GeckoGirl said...

Great advice but unfortunately, for most, it's easier said than done. Like the previous commenter, I know quite a few people whose financial situations are dire yet don't realize that you can't borrow your way out of debt.

Rich said...

@sharon -- yeah, there is a reason they call them HEL (Home Equity Loans). They can kill you.

@gecko girl -- I know what you mean, but some people only know borrowing as a way of life because they watched their parents do it or they have greater access to it than those before them.

Aunt Jackie said...

the greatest lesson my parents taught me was to stay debt free.

My mother recently retired and she was able to do so at a young age because she's stayed out of debt most of her life and lived within her means.

In Islam all debts must be paid before a Muslim is buried because it said to be a burden on the soul and could perhaps prevent a Muslim to enter the gates of Paradise.

There are even prayers to stay out of debt.

My only debt is my car, which I plan to pay off in the next year or so, just like my last one...waaay ahead of schedule, saving thousands on interest!

Anonymous said...

I'm young :P When you're young and you start at negative 10 million at birth it's not SO simple. I have a maxed out credit card for several reasons. 1) I entered into college with NO help at all and I wasn't allowed to get a job because of the program I was in. 2) I was no educated about credit as most people in poverty are not 3) NO ONE WAS HELPING ME and I had to take care of other people. And I DONT have any children.

There were times in college when I had no food to eat....none. as in water. The last thing on my mind was a credit card. However badly that could affect my future. It's a small number to me and with my college degree...I will have a better job/career than if I hadnt went that route and stayed debt free in the hood. So yes, I do have to tell myself that. The story varies for most people but how classist are credit cards? LOL It's easy to say "dont get it when you go to college" if you wouldnt have a problem paying for living. I'd rather have that one little card + my millions of loans and a two degrees than nothing and no potential of ever making it out of the hood anyday. I don't think debt is 100% behavior issues but many more. But behaviors can HELP change your situation. And there is lesson to be learned. Hopefully most people can learn to manage their money before they have children so they wont be dirt poor and their kids would have to spend extra time in their lives climbing out of poverty. Although I worked throughout college there wasnt one point in time that I could save any hundreds or thousands seeing as though many times I had to help provide for my family members as well as myself. So there's lots being left out besides behavior in my opinion. I don't think most people are so careless.

Anonymous said...

As usual Rich you hit the nail on the head with this one. This is one of your callings to inform us about financial issues. You eliminate a lot of myths and make things practical. The information you are sharing should be one of your books. So handle that. Great post! Continue to speak truth to power!