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Banking and Finance  » What are some common financial problems and how can you avoid

What are some common financial problems and how can you avoid

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Americans today are in bad financial shape. Here are some common

financial problems and ways you can avoid them altogether.

It is easy to admit that most Americans find themselves in bad

financial shape and have no idea how they even arrived at that

state. Some may think to themselves, "I'm educated. I went to

college. I know how to take care of my own money." I can tell

you right now that just because you have a degree under your

belt or just because you have a good-paying job, that does not

make you any less vulnerable to the financial instability that

people eventually wrestle with. Here are the key financial

problems that plague Americans today and ways you can avoid them

altogether.

Credit Cards

Say "No" to credit cards. From the millisecond you turn

eighteen, credit card companies will start preying on you to

take their "low interest" cards and start buying all of those

incredible things you have only dreamed of, like a surround

sound system or the newest computer. To this day, I get at least

four or five credit card offers in my mailbox daily. Credit card

companies are such an easy trap to fall into because, even if

you don't have a job, you will get approved. Unless you pay your

credit card bill off every single month and accumulate no

interest (and surprisingly very few people do), tear up all the

offers you have and cut up all of your credit cards. They are

not cards of "free money." They have something called revolving

interest which means that every single day, interest accumulates

ON TOP OF interest. It is a deep ravine to climb out of, so

steer clear of them.

Emergency Funds

Most people live paycheck to paycheck and have no "extra" money

to speak of. What this means is that when an emergency arises,

they will either take out a loan or use their credit card, both

of which require paying interest and sometimes years to pay off.

Stop buying that expensive mocha every single morning and

instead put that towards accumulating an emergency fund, so you

never have to fall back on plastic.

Life Insurance

Whether or not you have group insurance at work, get your family

some life insurance. You might ask yourself why bother if you

only pay a couple of bucks a month for that group insurance

policy they offer at work. Unless you signed a guarantee when

they hired you saying they would NEVER lay you off or NEVER fire

you, that job is not secure. When they lay you off, they will

not give you your life insurance to take with you, no matter how

nice they are. By getting your own personal policy for your

family, you are securing yourself and your family. If something

were to happen to you or your spouse and you relied on their

income and had no life insurance, your family would be entering

a tunnel of financial misery. Ask your financial advisor to

recommend how much coverage you and your family will need and

get it. Also, do not be scammed into buying a cash value policy.

You will get more coverage at a lower cost if you go with a

level term policy.

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Financial Planning

How long did you spend planning your last family vacation?

Probably a couple of weeks or at least a couple of days. Now,

how long have you spent planning your financial future,

including your retirement and your children's education funds?

Most people find it too scary to sit down and create a financial

plan. Hire a financial advisor to help you hash out a financial

plan. There are companies out there that don't charge hundreds

of dollars an hour to get this done for you, if you look around.

This person will act as your financial coach to ensure you stay

on track.

Retirement and Education Funds

Some people think of their retirement as this far-off event and

tell themselves they "have time" to start saving. No, you don't.

Retirement will be here before you know it and there is no

better time to start saving than now. By holding off on

investing for your future, you are only cutting down on all

those years where your efforts and money will be compounded and

working for you. The same goes for education funds for your

kids. If you begin investing for them as soon as they are born,

you will not have to put as much away monthly as you would if

you waited until they were 9 or 10 years old. Speak to your

financial advisor to get you started on these funds.

You can find more information here:

http://www.tradingideas4you.com/finance-money/finance-money.html

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