Monday, March 16, 2015

Till debt do us 'part

What's the best indicator of a growing economy? The high costs of a wedding. A new survey released shows that the average wedding cost $31,213 in 2014, almost at the peak of pre-recession periods. Now that the economy is strengthening, consumer confidence is rising again and more couples are tying the knot. Most likely, they're also tying their finances into a dangerous debt as well.

Last year, credit card debt was at a long time high. Consumers have wracked up $57 billion dollars on their credit cards, 47 percent higher than 2013. Once again, we can fault the growing economy as reports show that this debt has not been this high in five years.

The appropriate question becomes: why haven't consumers learned a lesson, especially after the recession of the past few years? The short answer is that they have still to learn about priorities. We live in a society that churns out better and faster products every year. There was a time when it took some time to develop a new or advanced gadget or item. Not so, thanks to technology. Add to that this ridiculous addiction to reality shows featuring the lives of the rich and famous. The grand and extreme is no longer for the wealthy. Now, everyone wants the largest wedding, the biggest house, and the latest haute couture.

But that's all excuses, really. It's common sense that we should live according to our means, and that anything beyond that leads to defaults, penalties, and compounded interest rates.

What to do if you're in over your head? First, stop charging your purchases. If you can't pay for something, then you obviously don't need it. Next, review your spending patterns. Over the next six months, record your spending so you understand where it is your money is going. Download a spending tracker app or open an online account at a free budgeting site such as Mint.com. Once that period is over, cut, cut, cut until your income exceeds your spending. If you have several credit cards open, pay off the one with the highest interest rates, and then suspend them as they are paid off. If you're still having financial problems, or you've lost complete control of your money, visit a consumer credit counselor near you. Initial consultation is free, but there are small charges for any service. Yes, it's extra spending, but one that will put you and your finances back in control.

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