How Did I Get Here?

October 17th, 2013

I How did I get here?

If only I had a nickel for each time that I was asked that question. Financial problems are something that just seems to creep up on people and until some crisis hits, nobody seems to notice the signs along the way. One such sign is the accumulation of credit card debt. Many people we see indicate that they always paid off their credit cards every month when the bill came in the mail. Then one month it just seemed to be a little bit larger than usual and there just was not enough money to make the full payment so then only half of the bill gets paid. We say to ourselves that this was just a onetime thing and we will catch up with the full payment next month. Unfortunately we do not adjust our spending habits this month and when the bill comes in it is even higher than the month before because we are carrying forward a half month of spending. There starts the ever increasing spiral of debt. We throw all our money onto the credit card but then in order to pay our day to day living expenses we use the credit card. Many people have said that they pay a large payment every month but when we look at the statement, the same amount is being used as either a purchase on the card or through cash advances. Many times the amount that was charged on the account is greater than the amount paid that month. Many clients need to understand that the use of credit cards is fine as long as the full amount of the debt is paid at the end of the month. If a balance is carried forward then we really need to look at our spending habits to see why and understand the fact that by using the cards with ever increasing balances we are creating a fake income that if not controlled or paid off, will result in a financial crisis.