There are exceptions to every rule, but the majority of people out there are not doomed to be poor. They are poor because they make common mistakes with their money and never quite get out of this destructive financial rut. Now as an economic recession looms, it is imperative that consumers identify trouble areas and climb out of this financial pit of poverty.
What are some of the trouble areas that prevent a household from saving money and elevating themselves from the “poor”? Easy financing is a hole that is always difficult to crawl out of, especially when a borrower has poor credit. This leads to borderline predatory lending practices with no chance of profit on the horizon. This immediately eliminates the possibility of you becoming rich, because the answer to riches is in slowly accumulating wealth.
Seven points of interest that deserve your attention include:
* Major spending on mortgages or rent, as in over 30% of your gross income
* Vehicle costs, as in over 10% of your gross, including all financing, repair work and gasoline
* Wants and Needs – deciding what you need (as in the basics to human survival) and then disciplining yourself as to the wants that are of exaggerated importance
* Paying back (in full) a payday loan or cash advance as well as credit card debt
* Failing to track where your money actually goes
* Living close to the edge of survival, having no cushion to fall on
* Squandering what you have
Some of these points are self explanatory, but let’s give special emphasis to the last point. Let’s say you have a retirement fun, such as a 401k account, which you can always roll over when it is time to switch jobs. However, if you squander what you have by cashing out – and losing money in taxes and penalty fees – then you have lost money that should have been profit to you. By failing to plan for the future and create a positive cash flow, you have destined yourself to remain poor.
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