Fortunately, most people in America are not penniless - but a whole lot of them are already broke and they just don't realize it, OR they just don't recognize the signs of looming disaster that will get them there faster than you can say "amen."
The average American has less than $1,000 in savings with no emergency plan in place. Instead of building up a savings account (or reducing debt), most people have a false sense of security as long as there is a little room left on a credit card to tap into when/if they need to. Does borrowing more money to pay against borrowed money make sense to you? That old saying "Robbing Peter to pay Paul" comes to mind.
Mishaps happen to everyone...death...disease...divorce...and when they do, the only thing that can possibly make the situation worse is having to deal with bills you can't pay or increasing debt while you charge-away your living expenses.
There is a way to prepare for an imminent disaster, but first, let's look at the top 5 things that lead the way to "broke"
1. MEDICAL EXPENSES - A study done at Harvard University reported that medical expenses represented 62% of all personal bankruptcies. One of the interesting caveats of this study shows that 78% of those forced into bankruptcy because of medical expenses DID have some form of health insurance. Medical expenses can financially destroy any one of us...insured or not.
2. CHANGE IN INCOME - Naturally your income will dramatically change due to a layoff, termination, or resignation, BUT it also changes dramatically through death and divorce where household income is cut in half. Not having an emergency fund to draw from only worsens this situation, and using credit cards to pay bills can be disastrous.
3. POOR USE OF CREDIT - Some people simply can't control their spending. It's the "I want what I want when I want it" that leads to a major disaster that was driven by the need for immediate gratification.
Credit card bills, installment debt, car, and other loan payments can spiral out of control very quickly and before you know it, you're borrowing money from one credit card to make the payment on another loan. This is probably the truest definition of being broke before you realize you are!
5. MORE GOING OUT THAN COMING IN - In the end, it always comes down to having too much money going out and not enough coming in. If that's the case, there are ONLY TWO options if you want to avoid financial disaster...spend less or make more. Again, tightening the reigns on just a few things can make a big difference.
When there's more going out - reduce what's going out! Avoid a $3.00 cup of coffee. Consider cutting cable. Consolidate trips to save gas. Carpool to work. There are lots of ways to reduce what's going out, but it takes a little sacrifice to turn things around.
Back in the "old days", most people had a side job or a small business to supplement their income. That option is still available today, but for some reason, most people don't consider working a few extra hours to be a viable option for their cashflow problems.
Why not have a small business - a work from home opportunity - that can get you from more going out to more coming in? An added benefit of having another source of income is that you have a back-up plan should something change with your income from your full-time job.
There are countless ways to avoid going broke but THE BEST way to avoid financial disaster altogether is to eliminate your debt completely. You'll need to have a little more coming in than going out - if you do, you could easily reduce the years to pay off your debt to 1/2 to 1/3 the time you're currently on target for.
Living Larger has a debt elimination tool in their arsenal that just might be what you've been praying for. A way out of the bondage of debt so you're better prepared for those mishaps.
If you'd like more information on how that works - with no refinance - no consolidation - no extra payments - no change to your lifestyle - no credit check, and no bull, reach out and we'll show you the way. Whatever you do, don't say "no" until you know what you're saying "no" to!
Sadly, GOING BROKE IS as EASY as 1...2...3 and most people don't even see it coming.