Having a sizable amount of debt can negatively affect your life in numerous ways. Being unable to pay your bills can cost your money in the long run and can leave you feeling insecure and helpless. Are you prepared for any unexpected expenses? Are you checking out a penny stock list to invest in? Are you saving up for retirement? If you give your finances very little thought, you’re increasing your chances of going into debt. Some of the main reasons why people tend to go into debt include not budgeting, unexpected expenses, and because they are dealing with life issues.
Failing to budget
Budgeting allows you to keep track of how much income and where your income is going. Failing to budget opens an opportunity to spend more than you make in income. There are plenty of apps that help simplify the process of setting up a budget that you could download today. Downloading an app may help, but you may find that continuously following your budget is a challenge. Many people end up failing to meet their budget guideline goals after the satisfaction of setting up a budget starts to wear off. Creating a savings goal or outlining a retirement savings plan may motivate you enough to continue following your budget.
Unexpected expenses include a variety of things like an unexpected death or an emergency. Obviously, you are unable to budget for the unexpected but you can create an emergency money fund that will help you pay for unexpected expenses. Most experts recommend having three to six months’ worth of money saved in the case of an emergency. For individuals who have just started to save money for an emergency fund, $600 to $1,000 is a great place to start. You could even open a savings account to store your emergency fund and allow your emergency fund to collect interest over time.
Life and health issues
Life or health issues can be the reason you are in debt, or your debt could be causing you to have mental issues. This is a perfect example of when outside help is needed. When dealing with extreme stress caused by a mental health issue or debt, your perception of things can be morphed. Instead of being able to stay calm in situations where before you could react level headed, you may now experience panic attacks or lack the will to care. Regardless of the circumstances its almost always better to receive outside help when dealing with a mental health issue. For individuals who are in debt and experiencing distress due to their debt, the mental debt line can help you find solutions to ease your financial concerns.
Investing in the stock market
Investing in the stock market is a great way to make a return on an investment when done correctly. An article on myjourneytomillions.com titled, “What Does It Mean to Buy Your Stocks Like Groceries,” explained this situation perfectly. The stocks you purchase should have some value behind them outside of market speculation. Even penny stocks can sometimes be a great addition to a portfolio. You should spend ample time researching any penny stocks you are considering purchasing to avoid being scammed of course. You should check aspects of the stock like the trading volume of the stock. You should also gather information about the stock from a variety of sources.
Setting up an IRA
Setting up an IRA may be a great way for you to save for retirement, depending on your circumstances. IRA stands for an individual retirement account. There are three types of IRA accounts. A traditional IRA account, a Roth IRA account, and a rollover IRA account. A traditional IRA account allows you to save money and possibly pay lower taxes on your savings later. A Roth IRA account allows you to save money you have already paid taxes on, allowing you to increase your saving and withdraw your savings tax-free. A rollover IRA simply means you are transferring money from a 401(k) or a similar type of account into an IRA traditional account. Compound interest along with the possible tax advantage of opening an IRA account are great reasons to think about opening an IRA account. You could save for retirement and prevent yourself from experiencing the stresses of debt later in life.
Avoiding and staying out of debt
According to CNBC, in 2018, 27% of Americans surveyed said they were in debt. An increase of 5% from last year. To avoid being part of this trend, budgeting, preparing, and researching about finances should be a part of your life.