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6 Ways to Better Manage Your Money

  November 23, 2021  |    #Eliminate Debt

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How to manage your money today

Current consumer trends concern us, increasing household debt, rising inflation, The Great Resignation and stagnant wages. Here’s a plan to manage your money through this and your free 7-Step Credit Card Debt Slasher guide to getting started.

Reasons to better manage your money

After a record-setting trend to pay off credit card debt in 2020 due to the pandemic, household debt’s on the rise again and holiday shoppers are expected to spend 25% more this year than last year. Our concern isn’t that consumers feel comfortable spending again, but with stagnant wages, high unemployment, a lackluster economy and inflation, consumers are overextending themselves.

Readers know that we don’t have tons of love for either Wall Street or Washington D.C. We’ve argued for business to stop hoarding piles of cash, $2.1 trillion of it offshore to avoid taxes – even with Trump’s mega-successful plan to have businesses repatriate their money.

Neither Wall Street nor D.C. seem to have concern for consumers. Both are waiting for consumers, allegedly 70% of the economy, to spend like it’s 2007 or 2019. If either has done anything, it’s been to urge consumers to spend again.

What frustrates us is that consumers are doing it!

Either consumers don’t understand or don’t care that when they voluntarily buy products and services with inflated prices, especially when they pay more than they can afford, consumers put even more inflationary pressure on those products and services.

Below are four major concerns.

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1. Consumers are overextended on cars

The average American worker spends $9,282 annually on car expenses, including standard maintenance, gas, tires, insurance, finance charges, depreciation and license and registration fees.

From the mid-70s until today, wages have only increased in real wages indexed to inflation by about 10%.

No need to fear, though. Corporate America and the government can rely on the consumer to spur the economy. Either because of pent-up desires, needs or both, consumers are taking out 60- to 84-month auto loans to buy the cars they really can’t afford.

This only tells automakers and auto-lenders that they can continue to increase prices and extend terms. Consumers aren’t concerned with a perpetual life of indentured servitude.

2. Consumers are overextended on college

The average cost of college in 1963, according to EducationData.org, was $243 or $2,078 a year adjusted for inflation. Since then, annual tuition has increased by $7,502 or 361%. Between 2010 and 2020, tuition increased by 41.2%.

Have your wages increased that much? Have wages for part-time jobs increased that much? To ask students to work their way through school anymore isn’t reasonable.

The Atlantic reported that it’s impossible for a college student today to work their way through school, as was done in our Norman Rockwell past. A Reddit user quantified the rising cost of tuition at Michigan State University (MSU) by cost per credit hour. The Reddit user said, “A credit hour in 1979 at MSU was $24.50, adjusted for inflation that is $79.23 in today’s dollars. One credit hour today costs $428.75.”

The article goes on to say that with the $2.90 minimum wage of 1979, it would’ve taken a student 8.44 hours, or basically one working day, to earn enough for one credit hour. A student with 15 credit hours per semester would’ve paid for all 15 credit hours with three weeks of full-time work or six weeks of part-time work.

With today’s minimum wages between $7.25 and $14, it would take a minimum of 59 hours to pay off a single credit hour that costs $428.75. That’s the equivalent of 22 weeks (five months) of full-time work or 44 weeks (11 months) of part-time work.

Because consumers are so amenable to spending their money on college indiscriminate of cost or access to a job after college with a commensurate salary, student loan debt from 2011 to 2012 increased 10.5% from $26,600 to $29,400.

We’ve oversold the value of a college education and created a false demand for more and more education. Colleges know this.

3. Consumers are overextended on home loans

If one were to only look at the housing market to gauge the fiscal health of the U.S. economy or of American families, they’d think everything was amazing. Mortgage debt in the U.S. reached record highs in 2020 and continued a trend that’s been building since 2013.

Before the pandemic, in 2019, already over 37 million households were “cost-burdened,” or were spending more than 30% of their income on housing costs. That’s expected to increase when the 2020 reports are published.

Consumers aren’t done with their over-priced and oversized houses, though, and the housing industry knows this. While it’s true that investors are a major player in increasing home prices, more increased demand only increases prices. Consumers aren’t helping themselves.

4. Consumers are overextended on credit cards

After a few years of being as cheap as Jack Benny, consumers paid off credit card debt in record numbers because of the pandemic. In the first quarter of 2021, consumers set another record by acquiring a record amount of credit card debt all buy wiping out any improvement from 2020.

Consumers aren’t slowing down, either, as it’s expected they’ll increase holiday spending by 25% over last year.

With an average credit card balance of $7,854 and an average credit card interest rate at 16%, it would take seven years of minimum payments to become debt free – that’s $7,854 in principal payments and $5,180 in interest payments.

That’s $5,180 that won’t go towards investments, college tuition or retirement. That won’t even be used to fund a vacation, use for a downpayment on a car or put toward a downpayment on a house.

What can consumers do? Hold a revolution with your wallet.

We need to break ourselves of the conditioning that more education is commensurate with more money. That very often doesn’t happen anymore. - John or Debt Free GuysClick To Tweet

Here are 6 ways to manage your money better

Consumers’ willingness to take on more debt and overextend themselves more simply permits businesses to increase the prices of their products and services more, regardless that consumers cannot afford it. Consumers will take out larger and longer-term loans and this makes businesses and banks more profitable and puts consumers deeper into debt.

We, the consumers, have the power to force prices to drop, the opposite of what we’re doing with wages and The Great Resignation.

Our weapon is our wallet. If we don’t open our wallets to buy products and services that have increased beyond reason, we can force businesses and sellers – school administrators – to drop prices. It’s supply and demand.

If we continue to overextend ourselves, we give businesses permission to increase prices even when our wage, employment and economy don’t support it.

Join the revolution. Manage your money better.

1. Manage your money better by leaving the Spending and Leveraging classes

Bluntly put, we must close our wallets to unconscious spending. We can no longer buy cars and houses that we cannot afford. We must understand that everyone doesn’t need to go to college and that some trade jobs are paying better money today. Making every high school graduate go to college puts many in poor financial situations and devalues college degrees.

We must shift from an unbridled consumption society to a justified consumption society. That means we must buy less, consume less and throw away less. This is why some claim we don’t value food.

Because of unnecessarily conservative food preparation and preservation standards, America throws away nearly 50% of its food. This totals $165 billion dollars, or $1,437 per household, worth of food thrown away annually. There’s been a 50% increase in food waste since the 1970s. This level of waste is avoidable.

Food is just one example of our consumption addiction. A car can and should last more than three to five years. With proper maintenance, we can own cars for ten or more years. There is no reason to trade cars in before they’re paid off.

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The average family can reasonably live in a 2,000 square foot house. Not only does this save on cost per square foot, but saves on heating, gas, electricity and other expenses. We don’t need to buy clothes every time there’s a sale or we’re bored.

2. Manage your money better by joining the Saving and Investing classes

To manage your money better, spend wisely. Consumption is necessary, but we must consume consciously.

This means knowing the value of purchases and understanding that cheaper isn’t always better. Teaser rates are just that, teasers. Read the fine print. Close your wallets to businesses that take advantage of the consumer through tax loopholes, supply manipulation and unethical labor practices.

Have emergency savings account with three to six months’ worth of living expenses. This makes you less beholden to bosses and companies we don’t like. An emergency savings account eliminates the need to take the first job offer after being let go or quitting or having to work for a shitty boss.

Invest more. You can’t spend your way to wealth.

You’ll never reach financial independence living off of credit cards.

Make your money work harder for you than you work for our money by investing in the stock market, real estate and your own businesses. Make your investment income exceed your living expenses.

3. Know that you are rich, and manage your money accordingly

If what we focus on expands, believe that you are rich and the money will come to you.

Many LGBTQ folks reach adulthood with limiting beliefs on what they can earn, what they’re worth and whether they deserve abundance. If this is you, raise your vibration and work to change these beliefs. They don’t serve you and, in fact, only hold you back.

Whether through the powers of the universe, the god of choice or simply a paradigm shift, your financial situation will change when you change our perspective.

4. Manage your money better by banking smarter

Fifty percent of LGBT respondents to Prudential’s Financial Wellness Census said they didn’t have a single banking product. You simply can’t improve your financial wellbeing if you’re not using the basic tools that help people have financial well-being.

Start your financial journey by getting a standard checking and savings account with no minimum initial deposit or minimum monthly balance requirement.

5. Manage your money better by voting for better candidates

We must be engaged in politics even when there isn’t a presidential election. Most of what affects your day-to-day aren’t federal policies or national politics, it’s mostly local. Don’t forget that the fight for LGBTQ equality typically migrates to the local level when those who want to do us harm no longer have as much influence at the national level.

Engage and vote accordingly.

6. Avoid debt to manage your money drastically better

Stop overextending yourself (and your family) on debt – credit card, student loans, auto loans, personal loans, mortgage debt and so much more.

Stop subsidizing your life and lifestyle with low minimum monthly subscriptions. Now that you’ve cut the cable cord, cancel all but one streaming service. When you’ve watched all you can watch on that service, cancel it and sign up for another service.

Cancel subscriptions to news and newsletters. Most of what you need can be found for free.

Cancel paid streaming music channels. Yes, the ads suck but all these tiny little payments add up.

Analyze your current spending to calculate the most effective ways to reduce your expenses and save more money. Get on a budget. Pay off high-interest rate credit card debt.

To help you with step 6, get your free copy of the 7-Step Credit Card Debt Slasher here.

Personal and national economic improvements can start with us. By shaking our apathy and focusing on managing our money better, we can use the power of positive thinking and positive action to overcome the new economy.

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More resources to better manage your money:

For more tips to manage your money better:

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We’re David and John Auten-Schneider, the Debt Free Guys and hosts of the Queer Money® podcast. We help queer people (and allies) live fabulously not fabulously broke by helping them 1) pay off credit card debt, 2) become part- or full-time entrepreneurs and 3) save and invest for retirement.

2 responses to “6 Ways to Better Manage Your Money

  1. We agree especially with your point about avoiding credit. Managing your wallet can be really difficult, but the more you are aware of your spending the better. Thanks for sharing!

  2. Excellent advice. Americans try to keep up with the Jones’ too much without a financial back up plan for unforeseen issues like a recession, illness, etc.

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