There is over a trillion dollars in credit card debt in the United States. Almost three out of four people live paycheck to paycheck. However, resources are not the problem, it is estimated that there is enough financial wealth for every person in the world to be a millionaire. So why do so many people struggle with money?
The reason is simple; the average person spends $1.10 for every $1.00 they make. People spend 10 to 20 percent more than they get paid, thus ensuring a cycle of debt.
Most of us have a certain image when we hear the term “deadbeat.” Usually the first thing that comes to mind is a less than flattering picture of an individual.
Yet credit card companies call people that pay off their credit cards each month deadbeats, i.e. they don’t make any money off these people. For the average household a full 20% of their salary goes to pay off credit card debt. Companies are heavily invested in people racking up more charges, thus they spend billions of dollars in research and in advertising all in an attempt to understand how to separate people from their hard earned money. As Cleveland's Action 19 News reports, credit card debt is only getting bigger.
Why is it so easy to get a credit card in college, when students often don’t work and are simultaneously racking up huge tuition bills? In psychology it is known as “first affection”; the idea that people have a special affinity for the first of anything they own. Think about how hard it was to part with the first car you owned and the fond memories it elicited. The same is true for credit cards. Normally people keep a credit card for about two to three years; however people keep the first credit card they ever owned for about ten years.
Credit card companies know how critical it is to gain loyalty by getting to be the first card in your wallet, thus they tempt students with free gifts so they will take a new card, even though they can’t pay for it.
More than nine out of ten couples list fights over money as the key reason they got divorced. What is the top cause of recidivism among recently released criminals? Money problems. These men and woman reenter society with little to no money and a lot of debt they still owe. The stress is often too much and they turn to substance abuse to ease the pain, and the cycle begins all over again.
Key financial experts have shared for years that the path to wealth is straight forward, spend less than you earn and invest the rest. To be fulfilled at the same time be sure to give part of your paycheck to worthy causes because as the well-known saying goes, the secret to living is giving.
It is the beginning of a new year, what better time to begin a new relationship to money, wealth and debt.