How to Go Broke in Less Than a Year
Most Americans are living paycheck to paycheck. The truth is most people have little to no savings. Worst of all, we're not really doing anything about it. As a result, many Americans are one crisis away from financial ruin. A study by CouponFollow found that 70% percent of respondents note their bad spending habits and will often pay more than they can afford for their homes, cars, clothes, and vacations.
Discipline in many aspects of your life can be helpful; especially in financial planning. The material things don't really matter but spending money without breaking the budget is a skill you have to learn and practice as soon as possible. However, if you don’t, you can easily go broke in less than a year.
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A common huge mistake many people make is purchasing big ticket items that depreciate in value. For example, when you buy a car, the second you drive off the lot, it starts depreciating in value. It is important to understand the impact of putting a large sum of money down and to weigh the pros and cons of leasing vs financing.
It is also important to avoid racking up consumer debt, such as purchasing clothes and shoes that are beyond your monthly budget. Although it’s nice to buy that outfit you’ve been wanting for so long, credit cards should be used in emergencies or to purchase items that in the long run are an investment. It’s all about a healthy balance!
If you need more insight about tackling your debt, read one of my blogs here!
For a more advanced crowd, investments might not be as easy as one may think. Try not to make bad investment decisions. Making an impulsive investment decision and having little knowledge of the risk you are assuming can backfire. Diversifying your investments is key to success.
So, the goal isn't actually to go broke in a year, the goal is to make sure that you don't! Having a financial plan is the #1 defense against going broke. Let's start by making one together.
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Registered Representative of, Securities and investment advisory services offered through Hornor, Townsend & Kent, LLC. Registered Investment Adviser. Member FINRA/SIPC. 600 Dresher Road, Horsham PA 19044. 800-873-7637, www.htk.com. HTK is a wholly-owned subsidiary of The Penn Mutual Life Insurance Company. HTK does not offer tax or legal advice. Caserta & de Jongh, LLC is unaffiliated with HTK. For Educational Purposes Only - Not to be relied upon as financial advice. Not all topics discussed may be suitable for all investors.