America, Home of the Financial Slave? Pt. 2

Welcome back, finance friends

This is part two of America, Home of the Financial Slave, so if you are joining for the first time, please be sure to go read part one, where we covered why 73% of Americans rank their financial situation as their number one cause of stress. 

Where we left off

As you recall, we took a dive into the average American and named him Jeff. To sum it up, Jeff seems to be living a financially prosperous life. Americans often appear to be rolling in riches through a car, house, degree, career, and vacations. However, due to the large amount of financing, debt, leveraging, and credit that has become normal, it is very difficult to tell who is actually financially prosperous and who is just a slave to multiple lenders. 

The question

Is it possible to avoid these mistakes? Can people like Jeff get out of their current situation and achieve financial freedom? How do the 27% of Americans who are not stressed win with money? This is a multifaceted question with hundreds of opinions, methods, reasoning, experts, and more. With the amount of information and financial opinions given via the web, social media, and more, navigating these can be a difficult challenge. Let's tackle some of the differing answers to Jeff's sticky situation. 

Keep it simple

Step one of your financial freedom journey is to keep it simple. World-renowned investor Warren Buffett said, "Investing must be rational; if you don't understand it, don't do it." The same is true across all personal finance. Never take on a mortgage you do not understand, or a car loan, or student loans, etc., etc. So many voices are trying to get you to give them your money. Before you do, ask yourself if you could write a 500-word paper on that topic without any help. If not, you may want to do some more research before locking in that 30-year commitment. 

Be careful who you listen to

We live in an era of opinion without consequence. Anyone can get online and start giving their two cents as if they are an expert regardless of their background. How often have you listened to advice from TikTok, YouTube, or other platforms from someone who appeared to know what they are talking about? It baffles me how people go and try financial things they heard on a TikTok video from an influencer who says they are an expert but have no way to prove it. This is a serious problem that is contributing to very poor financial decisions by the American people. Case in point, be very careful who you listen to regarding financial advice. A good philosophy to use when taking advice is doing extensive research on the person or entity before applying their opinion. What is their history? What makes them an expert? How is their private life? Do you respect how they carry themselves and the values they give? How long have they been advising or giving their opinion? Are there people vouching for them and their advice? Once you begin asking these questions, it won't be long till you know whether to take advice from them or not. 

Stop keeping up with the Joneses. 

Just because your neighbor, best friend, uncle, TikTok influencer, or wife's brothers roommate made a poor financial decision does not mean you should, too! So many of the holes people dig themselves into are with someone else's (often someone they trust) shovel. Do you know why Jeff pays large amounts of interest on his GMC Sierra he can't afford? Because his best friend from high school pulled up in one, and Jeff thought, if you can afford it, so can I (hint, the dealer will always agree). One of the best pieces of advice to keep you out of trouble is to simply stay away from comparing your possessions with others. Your value doesn't come from what car you drive, how many bedrooms you have, or your vacation to Paris, so quit acting like it!

Financial coach and advisor Dave Ramsey says, "Live like no one else, so later you can live like no one else." In today's world, living like no one else means not having any bad debt, so sign me up!

It takes discipline 

Pick a strategy, become a subject matter expert, and stick to it! If people would just stick to a plan that they understand and not chase every rabbit trail that comes along, they would build wealth more successfully and with less heartache. Of course, being innovative, entrepreneurial, and a risk-taker are not bad things. In fact, these attributes often contribute to large amounts of wealth and success. However, being wise with money is a tortoise and the hare kind of game. Saving, living on less than you make, investing in low-risk, well-performing funds, or appreciating assets without over-leveraging, all of these strategies take time and discipline. 

Habits 

"People do not decide their futures; they decide their habits, and their habits decide their futures." - F. Matthias Alexander.

Financial habits, good or bad, ultimately determine the outcome of one's financial future. Some good habits include staying out of bad, high-interest debt, saving 10% of all income either for emergency or further investment, actively investing in retirement, investing in appreciating assets, living on a budget and sticking to yourself, giving generously but within your means (do not put yourself or your family in a compromising situation) and don't forget to enjoy your income as well. Here are some common bad habits that people like Jeff fall into living paycheck to paycheck with no emergency fund, going into high-interest credit card debt, going into debt for depreciating assets like vehicles, financing a vacation, overleveraging to become house-poor, gambling, out of control spending, and so many more! 

The more you can stay away from the bad habits and implement the good ones, the better your future self and family will be. Also, don't forget, oftentimes, your habits become your kid's habits. 

Next Steps adn Resources

Practically speaking, there are a plethora of financial apps, investing platforms, budgeting assistants, advisors, analysts, and the list goes on. This can seem scary and discouraging for someone who wants to start but does not know where. Every person has a unique financial snapshot, and while there is a diverse landscape of tools and resources available, finding the ones perfect for your situation can be impossible. That is why we created the first plan calculator fully curated based on your specific financial situation. Enter every detail about where you are and where you want to be, and we will tell you our options for getting there and what tools are available to you. Our plans include everything from debt repayment of all types (home, car, payday, credit, student) to entry-level and expert-level investing to saving and budgeting strategies, all curated for you and you alone. 

Whether you are in large amounts of debt and feel like your financial situation is out of your grasp, or you just paid off your house and have large amounts of monthly disposable income to start investing, we can curate, compile, and provide the resources that will launch you in your journey. 

As the famous quote by Benjamin Franklin says, "Failing to plan is planning to fail." Do not go another day without having a plan for your finances. Let our team get you the right plan with the right resources to help you on your journey to financial freedom and a brighter future!