Want to know How to Go Broke in Chicago?
There are hundreds of blogs written every day offering great advice on saving money and making sound financial decisions. The common theme of these blogs: Saving takes both time and serious commitment. If there’s that many blogs out there about saving money, why are so many people going broke? The answer: It takes almost no time to go broke, and there’s absolutely no commitment on your part required to make it happen. A few hasty decisions and a hint of carelessness is all it takes to find oneself in a financial hole so deep, King Kong himself couldn’t climb his way out. How can it happen to you so easily, and so quickly? Here’s a few reasons:
You bought a house that was both too big and too expensive. Your annual income may be high enough to get you approved for that $400,000 home, but that doesn’t mean you should be purchasing it. Chances are, you could have located a different house at almost half the cost, decreasing your monthly payment by nearly 50%. Not only will your taxes be higher on a larger house, you’re going to be paying more for electric, heating and water. And when your roof or siding need repairs or your A/C breaks down, it’s going to cost a small fortune in maintenance.
You bought a car that was too expensive. You didn’t really need the navigation system or the DVD player in the back seat. Or maybe it was the 700 horsepower that convinced you to pay that ridiculous sticker price. You didn’t need all the extras and you could’ve gotten by on something for much, much less.
You have no budget and/or savings plan. Keeping a budget on a monthly basis goes a long way in preventing bankruptcy. Sticking to the budget will ensure you have enough money to pay your monthly bills and other living expenses without issue. A savings plan is crucial when considering unexpected expenses such as the roof or A/C on the house you shouldn’t have purchased. It’s too late for that now. You’ve already bought that house, and you’ve bought the car that’s costing you a small fortune, and you failed to budget. Unfortunatley, you haven’t considered the #1 reason why your about to have less dough than Pizza Hut.
Your swimming in credit card debt! This is the killer. Everything you’ve purchased has been bought on credit. Furniture, clothes, vacations, gifts… everything. You’ve got 18 credit cards, all with balances, and your paying 15-20% in interest on every balance. Before you knew it, you were paying them late each month and accruing late fees. Now, all you can afford to pay are the monthly minimums and that’s not enough to decrease your balances from month to month. In order to afford your home and vehicle, you have to stop paying the credit cards. Pretty soon, collection agencies are knocking at your door. Your credit score has gone from 700 to 520. Your employer just informed you that they’re cutting back and your salary has been reduced. Now you’re really up the creek with no paddle.
This type of behavior is all too common and it’s not an exaggeration. This is how to go broke in Chicago. Financial irresponsibility can lead to serious personal issues and can make life very difficult. Maintain a budget and stick to it. For help on budgeting, read this.
The good news? You can turn it around. If you need to talk to someone who can give you some additional guidance, call me.