Crisis in Retirement:
April 21, 2009 3:21 p.m. PST
While we look back over the past few years during this financial crisis how many times have you scolded yourself saying “I should have done this, or I should have done that?” And, “now it’s too late.” The problem with the negative self deprecation is the inability to motivate; instead fear is the resulting factor, thus in turn establishing a severe case of procrastination. Now is not the time to hide your head in the bunker it’s time to take action.
Regardless of how much money you have,
everyone has the same basic issues. Do I
have enough money? Am I going to be able
to retire? Do I have to work
forever? If retired can I stay
retired? We must face our biggest fears
especially now. There is no denying the
fact that financial markets have eroded a significant portion of everyone’s resources.
So unless you were clairvoyant, moved all your positions to cash, you most
likely sustained considerable losses. The time has come to address these
challenges. We must come out of the
bunker, assess our situation and build a game plan to allow us to meet our
goals. To accomplish that a through
evaluation of our situation begins with an analysis of cashflows.
American society, for years, has been spending, without giving thought to the the consequences of an increased debt load. Consumers instatiable appetite to spend has been fueled by banks and Wall Street. These company’s would lend to virtually anyone, with no concern about ability to pay back. Numerous programs were created including: home loans, equity lines of credit and credit cards. Individuals confidence to take on additional debt was bolstered by increasing home values and investment accounts. Times have clearly changed.
Americans are furious with the
financial company’s that lead us down this path. They mislead consumers while
lining their pockets. Now the
credit-card has come under scrutiny. The
industry has saddled many with massive amounts of debt, with soaring interest
rates. What’s even worse, many lenders (the same lenders who participated in
the bailout) changing their terms and raising rates, on the over extended
credit card consumers. According to an NPR podcast, in association with The
Washington Post, President Obama will be cracking down on deceptive credit card
practices and plans to meet with 14 major banks (NPR Story).
In a recent interview with Certified Financial Planner, Troy Daum, KNSD (NBC’s San Diego affiliate), revealed the deceptive practices being undertaken by the Credit Card Companies; they entice people to spend by offering an endless stream of credit. Many have spent way beyond their means amd certainly more than they could afford (KNSD Credit Card Crisis video).
While everyone’s cash-flow situation
may seem daunting, there are some fundamental steps you can take to put
yourself in control.
1. Understand your income/expenses by
using this simple expense worksheet to determine your expenses.
2. Many should simply stop using credit cards; They should purchase
what they need with cash. If something
they desire is not essential they should delay the purchase. Spend time evaluating whether it is a need or
a want, often by waiting a few weeks people find the item is not all that
important anymore.
I would encourage everyone to take
control in understanding how your expenses affect your life. Begin by
completing an expense worksheet, immediately payoff credit card
debts, relieve yourself of all other unnecessary debts. Using a credit card to
pay for your expenses, or for accumulating airline mileage is great…just make
sure to pay it off each month. Once you have paid off your debt, establish an
emergency reserve with the extra savings you have and start to see your money
accumulate. Remember don’t procrastinate it’s never too late to change.
Gordon Tudor, CFP®
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