Growing up I was taught that you could never spend more than you had. So credit cards were a big no. I was not supposed to get into a situation that was punishable by debt. I could use a “charge card,” but those I paid off in full at the end of the month. (Does anyone remember charge cards??) So upon graduating college, I got my very first American Express card. My rookie card was in the mint green family, and I never left home without it. But it didn’t matter much. Back then I could barely afford the $55 yearly fee! My average monthly balance was a goose egg– you heard that right, zero.
In those days I wrote paper checks for my rent, Con-Edison electric bill and home phone. I had no cell and no cable. No garage, maintenance, child care, LinkedIn, or Apple music charges. I paid for meals, outings, incidentals, and nightlife in cash. Life was oh so simple.
Many years later, life has certainly gotten complicated. Between condo assessments, healthcare costs, real estate taxes, insurance premiums and car repairs, the money seems to fly out the window faster than I can make it. And this is a topic I touch on frequently in my posts… How do you strike a balance between spend/enjoy and save/plan while feeling secure in your choices? Especially during a time when SO many corporate entities are filing for bankruptcy. Can we learn anything from market trends?
If you haven’t been following the financial news that closely (I don’t blame you!) let me update you. A slew of companies that are truly household names have recently filed for Chapter 11 bankruptcy protection. These names include: Big Lots!, Red Lobster, Express, David’s Bridal, Rue 21, Sam Ash Music, BowFlex, and WeWork just to name a few. And very recently even Tupperware filed.
C’mon you laughed, right! It seems it’s not just us chickens that can’t find our lids or get our finances under control. Corporate America is filing 11s at breakneck speed. And they reorganize, get additional funding, secure a plan that a judge has to approve, and use experts to analyze their numbers with a developed go-forward strategy so they can continue to exist and hopefully thrive. Without the benefit of a team to help each of us, we must assess our own individual situations and develop prudent solutions that ensure our financial futures. Failure to do so is punishable by debt.
Carrying dept is a not necessarily a bad thing. Debt load shows the credit bureaus that we are capable of paying monthly bills, which can actually increase our credit score. But if we stumble or run into financial difficulties, and the debt load is more than we can reasonably carry, you guessed it. Our credit score can plummet and the rates for which we qualify for loans or credit cards or a mortgage will be negatively affected.
The best way to keep ourselves in check is to not spend more than we earn. Sounds simple, right? But the kicker is to always have a bit of a slush fund on hand in case of an emergency. By the way, cute shoes or tickets to a concert do not qualify as an emergency!
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