Finance Globe

U.S. financial and economic topics from several finance writers.
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Almost Two-Thirds of Americans Admit Responsibility for Financial Troubles

Almost Two-Thirds of Americans Admit Responsibility for Financial Troubles

Almost two-thirds of Americans admit that their financial troubles are of their own doing, according to a December poll by the National Foundation for Credit Counseling. Of poll respondents, 63% said their financial woes self-inflicted for reasons such as overspending or being financially unorganized, and 37% said their problems were caused by events beyond their control such as job loss or medical bills.

"The poll results are encouraging, as the first step to correcting a problem is recognizing it," said Gail Cunningham, spokesperson for the NFCC. "Taking ownership of financial problems empowers consumers, putting them in the driver's seat to affect change."

To start off the new year with some new financial habits that will help you get back on track, the NFCC suggests “12 action steps” that can either be done one step per month, or faster if you choose to.

Have a credit report review - Know what’s in your report, check the status of your accounts, and look for identity theft by taking advantage of your free annual credit report (one per major credit bureau per year) at

Know the score - Your credit score is used by lenders to determine your credit card and loan rates and terms. A higher score is better and will get you the best financing deals. Keep in mind that it’s normal for your score to be slightly different with each major credit bureau, but large discrepancies should be checked out in case of errors or incomplete account information.

Reduce debt - Chip away at your credit card balances and loans and avoid incurring new debt until you have a handle on your current liabilities. Minimum payments should only be for emergencies or temporary setbacks - you should be able to pay off your full credit card balance each month.

Commit to save - Start your savings plan, no matter how small. If you wait for “extra” money to be left at the end of the month it just may never happen, so plan it into your budget and make paying yourself every month just as important as paying the mortgage or cable bill.

Get financially organized - Organize your financial documents such as mortgage papers, your will, insurance policies, and other important records. Label them into folders and put them into a safe or locking file cabinet, and they’ll always be where you can find them to refer to.

Avoid incurring late fees - Pay bills well before the due date, even as you receive them if you’re likely to forget to pay on time. Avoid ever missing a payment by setting up online bill pay for recurring payments.

Avoid paying overdraft fees - Record debit and check transactions immediately or keep receipts with your check registry so you can routinely update your balance. As a back-up, link your checking and savings account to cover in case of an accounting mistake on your part.

Track spending for 30 days - You may be in for a real shock to see where your money actually goes. Have everyone in the household keep tabs on every penny spent over the course of a month. Make adjustments in your spending as necessary.

Create a realistic spending plan - A budget should be realistic enough to stick to while moving towards your financial goals. Too restrictive and you’re more likely to call it a failure and completely abandon the idea. Too lax and you’ll make little or no progress.

Take advantage of free money - Take advantage of employer-matched retirement funds by making the maximum contribution. Also look at tax advantages in the form of Individual Retirement Accounts and Health Savings Accounts.

Have an annual insurance check-up - Being under-insured is taking a risk of being liable for more out-of-pocket expenses than you can comfortably afford, and being over-insured means you’re paying more than you have to for adequate coverage. Take a look at your health, auto, life, and homeowners policies and talk to an agent about changes that may be necessary.

Investigate refinancing the mortgage - Take advantage of historically low mortgage rates to save on your monthly payment and the total interest payments over the course of the loan. Avoid the temptation to extend your term or take out a bigger loan.

National Foundation for Credit Counseling

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Monday, 22 April 2024

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