We Americans are terrible with money. We’ve developed several really bad habits that are putting out financial futures at risk. Are you in that boat? Are you risking your financial future? You might be. Here’s how you may be risking your finances and setting yourself up for debt and catastrophe.
Use credit like free money
Got credit? Sweet! Go spend until you drop! Don’t worry about how much you’re spending. It’s not like you’re paying anything right now anyway, right? Have fun! Rack up all the debt you want.
Don’t have an emergency fund
Emergency funds are lame! If you have an emergency, just pay your bills with credit. That’s what normal, average Americans do. Be normal! You’ll probably never have an accident or get sick anyway. Don’t worry. It’ll never happen to YOU.
Out of credit? Get another card!
Credit limits schmedit limits. Don’t let maxing out a credit card get you down! Just apply for another card and keep spending. Those mean banks can’t stop your fun!
Spend everything you make
Savings? Lame! That’s something for old people. You want to have fun right now! Who cares if you spend more than you make each month. It’s not like you’re hurting anybody.
This is terrible advice
Hopefully as you were reading each of the sections above, you understood that this is absolutely horrible advice, and no one should do any of these things. Yet, millions of Americans (and non-Americans for that matter) treat their finances in just that way.
They treat credit like free money, failing to understand that it’s just the opposite. It’s debt. When you buy something with credit, you’re just promising to pay later -but you will have to pay.
They don’t prepare for emergencies. Look, I’m not trying to scare you, but you will have emergencies. You’ll crash your car or hit someone else. You’ll get sick, break a bone, need surgery and have a big medical bill. You’ll lose a job and need to find work without losing your home. All of these are very real, very common events that happen to real people just like you every day. Now, you can be stupid and think it’ll never happen to you. Or, you can be realistic and prepare for the possibility. What would happen if you lost your job today? Would you have enough in the bank to pay the bills until you find another job? What if you were hit with a big medical bill? Could you pay it today? Without credit?
They pile up credit. In reality, if you max out a card, that should be your clue to STOP spending. Figure out why you’re using so much credit and start paying it off. Don’t apply for another card so you can keep spending money you don’t have to get stuff you don’t need.
They spend everything they make. I’ve lived this one. Big time. Often people will spend all of the money they earn, buying gadgets and things and trips and blah blah blah. Why? Because they can. Now, don’t misunderstand me. I know there are times when someone needs to spend everything or close to everything he makes to make ends meet. But if your needs are met, and you have funds left over, what are you doing with those funds? Are you saving? Preparing for an emergency? Leaving a cushion in case you lose a job or have an unexpected expense?
Most Americans – “Normal” Americans as Dave Ramsey would call them – are guilty of every one of the above errors. This shouldn’t be. We’re digging ourselves deeper and deeper into debt with little to no thought or plan for getting out.
Don’t be normal.
Normal Americans are broke. Learn to make smart choices with your money. Avoid credit. Save money. Invest wisely. Be smart. Use the money God has given you wisely. If you don’t, you may find yourself without it.