| The US economy is booming, and so too is the stock market, thanks in part to the performance of Apple and its signature product: the iPhone. Millions of people have wanted one for over a decade now, and demand still appears strong. Even renowned old-school investor Warren Buffett, whose company Berkshire Hathaway now owns a big stake in Apple, has even called the iPhone “indispensable” to many.
But has our love affair with the latest and greatest tech – the iPhone in particular – gone too far? The results of a new survey from the personal-finance website WalletHub indicates that might be the case, at least for many young consumers. Roughly 28 million Americans believe that getting one of 2018’s new iPhones is worth going into debt. That opinion is especially pronounced among millennials as well as slightly older consumers. More than 18% of people under the age of 45 say a new iPhone is debt-worthy, compared to 5% of those who are 45+ years old. have they got their financial priorities in order? On the one hand, a new iPhone could be perceived as a good investment in an increasingly mobile economy, when a person’s social media presence can directly affect their ability to put money in the bank. “iPhones are becoming more than phones. They are quite functional little computers,” said Lewis S. Davis, an associate professor of economics at Union College. “Economically, it makes sense to go into debt for items that deliver services over several years. … If you tend to get a new phone every three years, however, then you shouldn’t take out a five-year loan to pay for it.” In many young people’s minds, the decision to incur debt to get a new iPhone may simply come down to which impacts daily life more. Debt is expensive, both in terms of interest owed and our ability to borrow for more important things in the future. But a cutting-edge smart phone provides a world of possibilities right now. Those are also big reasons why 44% of millennials believe their cell phone has a bigger impact on their life than their credit score. But are they right? “Their cell phones do have a big impact on their lives day-to-day, which, when summed over the course of their lives probably does outweigh the impact of their credit score,” said Arthur Caplan, a professor of applied economics at Utah State University. “Of course, for those millennials who are planning to own a home, a car and other things that we typically acquire debt for, then they may want to rethink their financial priorities.” That’s important because even though the economy is doing well overall, not everything about our finances has been fine in recent years. In particular, credit card debt and student loan debt have hit record highs, putting pressure on the very people who now seem comfortable borrowing to get a cool phone. |
Financial Priorities – debt-worthy must have tech
In the process of reaching your life goals, you might accumulate debt along the way. Millions of Americans carry student loans, credit card debt, and mortgages. One important factor many don’t consider is how geographic location impacts your overall debt burden.
A recent study released by Credible looked at 540,000 borrowers from all 50 U.S. states analyzing the average monthly debt payment (credit card, student loan and housing). The information about debt-to-income ratios gives us an idea about which states might provide you a financial advantage.
Low Debt-to-Income States
According to the report, Michigan, Arkansas, Delaware, Kentucky, and Missouri had the lowest debt-to-income ratios. For example, Michigan residents spent just 25.3% of their monthly income on credit card, student loan, and housing payments. Michigan had the best score of all in the study.
High Debt-to-Income States
On the other end of the spectrum, Hawaii, Washington, Colorado, Oregon, and Montana had the highest average debt-to-income ratios. If you live in Hawaii, you spend an average of 36.2% of your monthly income on debt payments. That means for the average annual income of $56,889 in Hawaii, $20,593 goes towards loan payments. Hawaiians pay more debt per dollar earned than any other state in the country.
What Causes the Difference?
Are Hawaiians spend happy and residents of Michigan frugal by nature? Maybe, but the full explanation for the differences probably has more to do with macroeconomic factors in each state. In Michigan, the lower cost of living shows up as lower housing, credit card, and student loan payments. Needless to say, housing costs in the Hawaiian islands are very high.
Where You Live Affects Your Debt Load
Where you live affects your debt burden, and the data proves this point. All other things being equal, the state you live in can have a significant impact on your financial health.
Read the Credible report: Burdened by Debt: The Best and Worst States at Managing Debt.
What Is Insolvency And How Can You Help Yourself?
Insolvency is a term see when you are unable to pay off any debts you have and therefore fall into a void where you are trapped without means of getting out. It can be a life changing thing for many people and makes things incredibly difficult for many.
When you end up in this rut it can be difficult to think of finding a way back out; but it is important to remember that absolutely anything is possible if you simply start creating better habits in your life. If you feel as if you need help with insolvency this year, here are some of the ways you can prevent it from happening again and also dig yourself out of the rut.
Stop Borrowing
The most important thing you need to remember is that borrowing money will only lead you to have to pay it back. It means that if you are already in debt and to borrow more money, you land yourself deeper in debt. The trick to staying financially stable and digging yourself out of this hole is to stop borrowing money and instead focus on getting rid of your current debt. It might sound very obvious to you, however it is something many people don’t think about. It is often all too easy to keep on borrowing when you are used to borrowing money.
Budget
Budgeting is something which you need to do if you want to stay afloat and keep your finances stable throughout the year. It is important to set yourself a budget for every aspect of your life because it will enable you to spend money while also not worrying about getting into debt. For example for your food shopping each week let’s say you set yourself a budget of $100. This will be a goal to stick to and will mean you have extra money left over for savings or to use in your lifestyle. Understanding how to budget and making a conscious effort is crucial for better financial health.
Focus on Needs
When you are trying to get yourself out of debt, make sure you always focus on the things you actually need rather than what you want. Sure, it’s great getting a takeaway when you don’t want to cook or popping out to the cinema, but when you are in debt these are things you need to cut down on a lot, if not completely. Save the money you would have spent on these activities and use it to pay off your existing debts.
Talk to your Creditors
If you keep quiet as you begin to have problems with laying off your debts each month, you won’t get the help that you need to get back on track and be able to pay them off. The best thing you can do if you find yourself in trouble is talk to your creditors and ask them for advice on what to do. They will be able to set up a meeting with you to discuss how much you are able to pay every month, and this will mean that you pay off less each month for a longer period.
Check Interest Rates
If you have multiple debts to your name at the moment you will want to prioritise which debts you focus on paying back first. Always focus on the highest interest rates first because this is where a lump sum will build up much quicker for you to pay off. If you can pay off these debts first, it means that you have more time to focus on the lower interest rates because they won’t build up as quickly for you, therefore they will be easier to handle.
Consolidation
Debt consolidation isn’t necessarily the best option for everyone out there, but it might be just the thing you need to make paying off your debts and getting back on track with your finances easier. Debt consolidation involves you taking all of your existing debts and merging them into one large lump sum with monthly payments which are higher. It will usually mean that your payment term is longer than the single debt, but it will make things less complicated for you and will mean you only have one interest rate to worry about. It should make paying off your debts easier in the long term and get you back on track with your money.
Dealing With Financial Problems
If you can breeze through life without any issues with money, then you’re a very lucky person indeed. It doesn’t matter how old you are, what you do, or you background, you’re most likely going to run into some financial issues sooner rather than later. As soon as you leave the safe nest of your family home, you start to feel the strain. As soon as you start your own family, you feel the strain even more. But the one thing people seem to do is deal with financial issues the wrong way. They’ll put other things first, let things build up and up, and before they know it they’re in so deep with their problem that it can seem like they’ll never be able to get out. So, to help you deal with your financial problems, here are the most common issues people face and how you can solve them.
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Work
Work will drag you down until you feel as though you have nothing left. It might not seem that way to begin with, but over time you’re most likely going to be overworked and underpaid. It’s a situation a lot of people are in all over the world. Companies are just treating their staff the wrong way. Plus, with the cost of living to factor in, you really don’t have much money left after having to pay bills. Now, there’s not much you can do in terms of your current job. If there are any promotions going, make sure you’re putting yourself forward for them if you want a chance of being treated better and to have more money. The alternative is finding a company that you actually wish to work for, and one that is going to treat you how you deserve to be treated. The bigger companies out there usually pay the better wages. Companies like Google really know how to treat their employees and how to pay them well. As well as the bigger companies, some smaller ones also pay a really good wage, you just need to make sure it’s actually what you want to do before going into a new job.
Relationships
Yes, relationships can get you into a lot of trouble with money, especially if you’re younger. Young adults are always searching for love no matter where they go. Once they’ve got that love, it’s the acceptance they’re looking for. This is often done by overspending in a lot of cases. The odd treat for their partner here and there suddenly leads to store cards being taken out, and even credit cards. But as adults we’re no different. In fact, we might even be a little worse. Growing up means going into serious commitments such as marriage. Unfortunately, the generation below us seems to be rushing into marriages after a few months of knowing each other. It’s one of the reasons why the divorce rate is actually so high at the minute. Companies such as austin kemp divorce solicitors have to deal with cases daily, and getting you the right settlement is always at the heart of what they do. But going through a divorce is just so expensive itself, it can often put people in a lot of trouble. To make sure you don’t find yourself in troubled waters as soon as you come out of a divorce, the best thing you can do is ask for help from a family member. The money you’ll need to lend will only be temporary, and you’d be able to give it back as soon as the money from the settlement came through. It just saves you having to go through a loans company which could ultimately damage your credit score, and it’ll definitely have interest rates that are going through the roof.
Home
As we’ve said, once you leave the warm nest of your family home, you soon realise just what living truly is. Nothing seems to be more expensive than bills, but bills are just something you can’t escape if you want to have your own home. The best thing you can do here to reduce them is look at your own habits within the home. If you know you and your family spend 20 or more minutes each in the shower each day, then you’re obviously going to have a problem with your water bill. If you’re someone who leaves the plugs on no matter what, then you’re going to have a more expensive electricity bill than you need to. Smart choices equals a better future, so just think about what you can do around the home to save yourself a bit of money. If you have a family with children of any age, it’s important that you’re educating them on what they might be doing to cause the bills to be so high. It’s often them that creates the most problems, but they often don’t even realise they’re doing it.
Debt
Debt is one of the most scary money problems that you’ll ever face in your life, yet two thirds of the earth’s population are in debt right now. That’s because it’s just so easy to get into a situation like it. One thing leads to another, and all of the sudden your debt will spiral out of control, and you’ll feel as though there’s no turning back from the situation you’re in. When you’ve got bills to pay, mouths to feed, and debts to pay off, it’s obviously the debts that come last in line. The best thing you can do is sit down and do a plan of what needs paying off by when, and how much money you’re going to be able to sacrifice a week or month in order to pay it off. The more methodical you are, the easier it’s going to be to follow. There are some great ideas for reducing debt in this article .You might also benefit from talking to a financial advisor to see if there are any alternative methods to paying off the debt. They might advise you do to debt consolidation. This puts all of you debts into one place, with one monthly payment. A lot of people find this so much easier to manage.
Defeating The Villains Of The Financial Business Fairy Tale
Any fairytale needs a hero and a villain. Neither can exist without the other, and there have been some fantastic villains. You’ve got the obligatory evil stepmother, the snow queen, and even the big bad wolf. Any one of which is sure to send shivers down your spine.
Sad to say, such villains don’t only exist in books. There are many real-world villains, too. They make themselves known in the criminal, political, and even financial world. If we had our way, there would be no bad guys when it comes to finances. But, that’s rarely the case. Both our personal and business finances go up against the baddies. This can be tough enough with private finances, but when your business is up against it, the risks are even more substantial. That is unless you find a way to defeat those baddies. Which is precisely what we’re going to look at here.
Debt
The first financial villain is debt. It makes itself known, even in the business world. There’s no way to start an enterprise without borrowing, or spending, a significant amount. Of course, that isn’t an issue if profits cover the cost. But, if your business takes a while to get off the ground, debt can get out of control. When you’re failing to pay large amounts, there’s a risk that your company could go bankrupt. To make sure that doesn’t happen, it’s essential to get a grip on finances. Cut costs and do your utmost to meet payments. If there is a delay, talk to the company in question. With open communication, it’s likely you’ll be able to reach an agreement. If you keep quiet about your troubles, however, you’ll soon find yourself in a bad situation.
Bad credit
In many ways, bad credit is debt’s right-hand-man. If you miss payments, you can be sure that bad credit will follow. And, this can make life difficult in many ways. For one, it’s a black mark against your business. On top of which, this will make it difficult to get a loan down the line. The good news is that there are still options out there. With a fast business loan, bad credit doesn’t have to ruin your options. What’s more, keeping up with payments on this second loan can improve your credit rating. As such, facing the fear here could be the best method of defeat.
Unexpected expenses
Villains love to make us jump, and unexpected business expenses often do just that. Just when we think we’ve found our financial footing, you can guarantee that a breakage of some sort sets us back again. The best way to defeat this villain is to save a rainy day fund. When things are going well, set aside as much money as you can. Then, you can dip into this if anything happens. A fast loan, like those mentioned above, can also save you here. But, remember that you won’t have to repay your savings, so that’s by far your best option.
