Finances can be like the craziest Ferris wheel you’ve ever been on! You know the ones I’m talking about. The ones where half the cars can slide around on a little track and just swing for days as the wheel turns. I HATE THOSE – they stress me out! I love rollercoasters, man, but you can have those little swinging cars of death. But isn’t that how our finances feel sometimes? Once we think we have a handle on things, the wheel turns and we fall. And if we fall enough, the stress on us both mentally and physically can be excruciating! So, how do we fight this? What do we need to know? We first need to uncover what started us on this wheel.
Here are 4 things that may have contributed to your own mental and financial Ferris wheel
BNPL. I cannot tell you how much I dislike this practice. BNPL stands for “Buy Now, Pay Later” and though it’s been around for a while, it’s leaving its mark on many consumers that if not curbed, could be devastating. The enticing 0% interest rates that many have, is just bait to put you on a dangerous financial hook. Two reasons (among a zillion) why BNPL causes stress:
- It makes it way too easy to rack up debt. According to a Motley Fool survey, 31% of those ages 25 to 34 missed a payment. What happens when you miss a payment? With Afterpay, it was a fee of 25% of your initial order value! With Affirm, there was no late fee, but their interest rate was up to 36%. With the holidays coming up and many feeling unstable about their financial position, this method could be extremely dangerous to many when they realize they can’t afford the payments.
- They hurt your credit score. How? With credit cards (and I caution the use of them), the companies will report both on-time payments (boost in credit score) and missed payments (hit to credit score). With BNPL, most only report missed payments. Which means, the BNPL practice does NOTHING to help your credit score, except put it in danger if you do miss a payment
We kind of got used to having those stimulus checks. Yes, because of COVID, the economy needed boosting, but at what cost? A good thing turned bad when consumers began relying on money coming from the government. The top three areas Americans spent their stimulus checks on were: Food, Utilities, and Household needs. Sounds logical, so what’s the problem? The problem is that those three areas should have told us what was in jeopardy once those checks stopped! We should’ve been forming a strategy (consumers, businesses, and government alike) to make sure the four-walls of American households stood strong.
The job market and mental health have not been friends for a while! Too many companies lost great workers due to the lack of mental health in the workplace, and too many capable workers jumped from job to job to try and find that one place that cares. The lack of stability in having a job and a consistent paycheck, forced many to seek other ways (like BNPL and stimulus checks) to pay for the things they needed while in-between jobs. Now with the job market finding a balance again, workers will have to be very diligent and quick to land that new job!
While the labor market remains strong, jobseekers “need to be on their best game” since they no longer have “unprecedented” leverage when seeking work, Julia Pollak, chief economist at ZipRecruiter said. Workers face more competition for open roles, she said. There are opportunities but they’ll be a bit harder to find, she added. “It’s a numbers game,” Pollak said. “Apply early and often. Speed really, really, really matters.”
CNBC.com
And the age-old, not-so-favorite, is DEBT. For all the information, statistics, apps, and infographics we have about how bad debt is, we still have a huge issue with it. We hate it, but we can’t seem to live without it. We blame living paycheck to paycheck, the economy, the government, the utility companies, the grocery stores, etc, etc. But here’s the thing, you can control how all these things affect you. Will you have to adjust, sure! But it beats trying to pay off debt.
The Federal Reserve tracks the nation’s household debt payments as a percentage of household income. The most recent debt payment-to-income ratio, from the first quarter of 2023, is 9.6%. That means the average American spends more than 9% of their monthly income on debt payments.
Motley Fool
3 things you can do today, and they’re going to sound old as dirt, BUT THEY WORK
Get a budget going. I KNOW! It’s so old sounding and boring, but let me tell you something, I had a client tell me “I have more money in the bank!” after I started him on a budget. He had more money in the bank, and when big bills came up, they were already saved for. Did he have to adjust, absolutely. It wasn’t easy for him. But the pressure that was off his shoulders because bills were being paid was priceless!
Create a Meal Planning Calendar. Again…I KNOW! It’s so old sounding, but here’s the thing, your grocery bill will go down! When you can plan out your meals, you not only make your food purchases go farther (with less food waste), but your money will too. This is also a great way to get your kids involved to learn about cooking and budgeting for your meals.
Start saving for an Emergency Fund. Many roll their eyes when I mention this, but I’m like “DUDE, you’re not gonna be rolling your eyes when that HVAC needs replacing! That little gray box that keeps you cool is like family!” Not having an emergency fund is like not having a safety net, and EVERYONE needs a safety net. No one walks by a bunch of bee hives and says, “I’ll take my chance without a suit.” That’s dumb. Don’t be dumb bee man!
Once you do those 3 things, you have just scratched the surface of a great system that will carry you through all the highs and lows of the economy. BE SMART! People who are reactive to the economy end up on a crazy Ferris wheel. Those who control their financial lives by being proactive end up on the lazy river with a cool drink in their hands. If you need help, reach out to me! I offer free consultations so we can figure out exactly what you need before we begin. Let’s do this!
Keep up-to-date with PennyFruit’s Weekly Blog! Subscribe below.
Leave a Reply