Don’t Be Satisfied with the Status Quo

No news isn’t always good news when it comes to your money.

The financial experts at Bankrate recently released a report with a shocking headline, “37% Have Credit Card Debt Which Matches or Exceeds Their Emergency Savings.” However, when you read the report, you realize they are focused on only one part of a much larger Financial Security Index they conducted.

Interestingly enough, only 24 percent of survey respondents had debt that exceeded their savings, while another 13 percent had no credit card debt but they also didn’t have any savings either. While that’s not much better, it’s not quite as bad as the headline makes it seem that one in three Americans couldn’t pay off their credit cards with the money they have in savings.

What’s more interesting though, is what’s hidden in the data they obtained from the Index. Looking at the numbers as a whole, it starts to seem like the average consumer is satisfied with the status quo. They’re not struggling, but they’re not making any financial headway either.

  • 63% of respondents feel “about the same” with regard to job security as they did twelve months prior
  • 47% feel “about the same” about the amount they have saved up in comparison to last year
  • 52% feel “about the same” about debt compared to 12 months ago
  • 56% feel “about the same” about their net worth, assets and real estate, too
  • Not surprisingly, 52% feel “about the same” when it comes to their overall financial situation

Looking at the numbers, it seems basically like half of America is stuck in neutral when it comes to their financial outlook. They’re not worse off, but they’re not any better either.

“When it comes to your money, you should never be satisfied with the status quo,” says Gary Herman, President of Consolidated Credit. “If you’re not overcoming a challenge, like eliminating debt, then you need to be focused on building savings and increasing your net worth. Otherwise, you’re basically one mishap or unexpected expenses away from financial disaster.”

Tips to get you moving

Essentially, you should always be working to build a better financial outlook for yourself. That means taking consistent and regular steps to:

  1. Keep debt minimized
  2. Maximize your credit score
  3. Build your savings
  4. Increase your net worth

“If you’re just paying bills and paying for expenses that arise, you’re just treading water,” Herman continues. “You constantly need to be building so you have as much padding as possible to fall back on if something happens to knock you back.”

Herman and the counselors at Consolidated Credit offer the following advice:

  • Never be satisfied with a minimum payment schedule. Pay off as much credit card debt as possible on time, every time so you can keep your debt levels as low as possible. This will minimize your debt while helping to maximize your credit score.
  • Put money aside every month. Your savings should never be static, you should be setting aside money every month – ideally about 10 percent of every paycheck. Then once you have the money saved, you can allocate it for different saving strategies you implement to help you reach your goals.
  • Invest to increase your net worth. Net worth measures the total value of your assets minus any debt you owe. It includes investments, property, and other big-ticket items with cash value assigned by the market. If you aren’t sure where to put your money, then get yourself familiar with investing basics so you can start to build your knowledge.

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