Maybe you’ve experienced this. You’ve been trying to get ahead financially, scrounging up a little bit here and there to save into an emergency fund or your IRA, but it just seems like you never make any progress.
Why is that? What are some things that are killing your financial progress? Let’s take a look at five things that may be impeding you financially, and ways to overcome:
1. Bury Yourself in Credit Card Debt
This is obvious, but if you want to know the single best way to kill your financial progresss to bury yourself in credit-card debt. All that debt you’ve racked up, and all that interest that keeps getting tacked on is a sure-fire way to bury yourself right into a financial black hole.
It can be an endless cycle, and almost an addicting cycle as well. It’s so easy to get that monthly statement and want to cure the shame by going out and buying yourself something nice. Believe me, I’ve been there. But, I also worked hard to get out of debt!
The way forward is to STOP! Stop using your card for a while, go on a cash diet, and use any extra money to pay down that debt. You’ll get ahead when you stop using that card for things you can’t afford!
2. Spend More Than You Make
Speaking of using that card to buy things you can’t afford, let’s talk about the real issue. If you spend more than you make, I can guarantee that you will never get ahead financially. You will absolutely kill any financial progress you’ve made!
This is a basic one as well, but I’m amazed at how many folks continue to spend like there is no tomorrow! This is the root cause of debt! And it doesn’t matter how much money you make.
I know of a very successful professional who constantly spends more than his huge salary. And he finds himself in more and more debt each year. The way ahead here is to make a budget, review it after a month or so, tweak it, review it again, and stick to it!
3. Take Withdrawals from Your 401ks or IRAs
Taking an IRA withdrawal or borrowing from your 401k is like taking the express lane to financial regression! Sure, it seems like a great idea, right? Borrow money from yourself and pay yourself back with interest! What’s not to like?
I’ve seen 401k loans go bad so often. If you lose your job, quit, or retire; that loan will be treated as taxable income for the year and you’ll have to pay tax (and potentially a penalty) on that money!
The opportunity cost of taking from an investment that could be earning higher interest than what you’re paying yourself, plus the loss of compounding make this a bad move!
Yet, many folks borrow from their 401ks like it’s their emergency fund!
The way ahead is to totally forget about your 401k or IRA (at least until retirement, that is). Leave it alone! Don’t touch it. Seriously, don’t touch it – just keep saving into it and forget you even have it.
4. Keep Up With the Joneses
Well, there goes neighbor Jones in his brand new luxury car! “Wait a second”, you think. “I know I make more than him, how can he afford that car?”
“If he can afford that car, then I know I can. Plus, it’s embarrassing driving this hunkajunk car past his house every day. I’ll just check online to see if there are any deals on those new Audi’s!”
And there you go, you take on a ridiculous car payment to keep up the image. But the reality is, your neighbor probably can’t afford that car either. So you both spend money you don’t have on cars you don’t need to impress others. It’s a cycle. Dont’ get me wrong. Luxury cars are not evil.
The issue comes when we lack contentment and buy things we can’t afford! Keeping up with the Joneses has devastating effects! The way out is to seek contentment. Understand that material wealth alone does not make you happy, and that you should be using your time and energy to pursue True Wealth!
5. Cease to Care About Your Money
If you really want to kill your financial progress, then just stop caring about it. Unfortunately, I’ve seen this all too often, where a couple just thinks that everything will just work out by itself. They stop proactively trying to get ahead.
Usually, this is the case when one is in massive debt, and sometimes the reality of the credit card debt almost freezes someone to a point where you can’t do anything and you don’t want to do anything.
The way out is to reorient yourself back to the basics again. Dream about the day when you’ll be debt free. Read stories of how others have succeeded and use that as motivation. Figure out how to save money and start caring about your finances again.
What are some things that have killed your financial progress in the past?
Photo by skibler