How Debt Impacts Saving and Your Financial Future

Americans are experiencing a savings crisis. Since the 1970s, our personal savings rate has fallen from 12% to 7.6% today.

When it comes to your finances, no amount of positive thinking or good attitude will help you grow your bank account unless you back them up with some action. Too many people are plagued with bad financial habits.

Here are some major reasons why someone might fail at saving their money:

Personal debt
A recent Bankrate study found that 29 percent of Americans have more credit card debt than they do emergency savings. And the problem is getting worse. The average credit card offer currently has a 19.02% APR, and the rate on existing credit card accounts is 15.10%. These high-interest rates mean you are paying back much more than you originally borrowed, making it tough to save.

Paying off your debt is not always easy, but here a few ideas from financial experts that could help:
–    Set up automatic payments from your paycheck. This way you always pay on time, and you don’t forget when your payments are due, resulting in late fees.
–    Refinance your debt if possible. Consolidate it or transfer it to a credit card with a lower interest rate.
–    Save in any way you can, including trying a no-spend week, or even a weekend.

One way to find money to save is to cut down on wasteful spending. USA Today listed some of the ways Americans waste money. Chief among them were:

1.    Wasted energy bills
2.    Daily coffee purchases
3.    Premium cable packages
4.    Traffic tickets
5.    Lottery ticket purchases
6.    Unused gym memberships
7.    Tobacco, alcohol, and gambling
8.    ATM fees
9.    Expensive (unneeded) warranties
10.    Credit card interest

Wasteful spending can come in many different forms. For some, it's the weekly stops at the local mall, while others might be addicted to the latest pricey electronics and gadgets. For a large percentage of people, it's food spending that's to blame for their money troubles. If you're heading out to a restaurant for lunch each day, you could literally be eating your savings away.

Make Saving a Priority
Too many people don't put their finances first and simply let the chips fall where they may. Sadly, letting your finances "happen naturally" is the worst way to get ahead, mostly because life happens, bills happen, and it's easy to get off track. The old saying, “Hope for the best, but plan for the worst,” applies here.

When you don't make your finances a priority, it's inevitable that your situation won't change much. If you really want to get ahead, you must put your money first, and take steps to save, pay down debt, and invest wisely.

IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC