5 Financial Truths You Need to Face Up to NOW

This post isn’t for all of you, but I’d be willing to bet that if it’s not for you, you know someone that it is for. If you’ve got your finances together but know someone who desperately needs to get theirs together, please consider sharing this post with them if you think it will help them. 

Every once in awhile I feel a desperate urge to issue a wake-up call with those struggling with paycheck-to-paycheck living. Today is one of those days.

I’m going to be honest in this post. Really honest. Not because I’m mean that way, but because I really want you to stop living a life of financial hell. A life where you’re calm one minute because you can make the minimum payments on your debt and still have a small bit of breathing room, and off-your-rocker stressed the next minute because the da*n furnace just went out and you don’t have the cash to get it fixed. Oh goodie, more debt.

We’ve Been There, and Most Americans are STILL There

According to studies, this is the way that between 55% and 76% of Americans live. Some more interesting stats about Americans and they way they live their financial lives?

  • More than half of Americans (63%) have no emergency savings
  • 31% of of non-retired adults have ZERO retirement savings
  • The average U.S. household with debt carries a credit card balance of over $15,000
  • The average car loan taken out by citizens is nearly $28,000

Living with debt is okay; until it’s not okay. The 76% of Americans living paycheck-to-paycheck can tell you of the stress of carrying too much debt. The experts may say that “it’s all good as long as you can make the payments”, but Americans who are actually living with the debt know different. Carrying a heavy debt load wreaks major havoc on individuals, marriages and families.

Recommended Reading: Financial Peace Revisited: New Chapters on Marriage, Singles, Kids and Families

Having too much debt can put you at a bigger risk for a heart attack, a divorce or a mental breakdown. It’s tough living a life where your financial security is always hanging in the balance and you’re one paycheck away from falling into big financial trouble, like getting behind on your mortgage.

I know, because that’s the way we used to live too. It was hell on our marriage, on our family and on our physical and emotional health. But we put up with it because it was “what everybody did”.

There seems to be a common lie running through many American households about debt. That lie is that “everybody” has debt and “everybody” has car payments, credit card payments, personal loan payments, student loan payments, etc. so that people should just accept debt as a way of life and be okay with paycheck-to-paycheck living.

But friends, there is a better way. Read any number of the thousands of personal finance blogs out there and you’ll see that real people are paying off debt and building wealth. The problem, I think, between those bucking the system and those living with the system is that a.) the “living withs” don’t know where to start, or b.) they are overwhelmed by the amount of work it will take to clean up their financial mess.

We were there too. We’re still digging out of massive consumer debt after four years of work. But you know what? It’s been worth every ounce of effort and more. Soon we’ll be totally consumer debt free, and I’ll share our exact numbers with you, but suffice to say that our consumer debt load was really, really high. Much higher than most people, based on the stories we’ve read. And as we eliminate our debt, we increase our peace.

I want that increased peace and decreased debt for you too, my friend. It will take some seriously hard work, but you can have those things. So in the name of motivation, here are five financial truths that you can face up to today, if you choose, that will help you get on the road to a life of financial peace.

Stop Making Excuses for Your Money Mess – You Deserve Better

For years our money mess was never our fault. Our money mess happened, we told ourselves, because:

  • We just didn’t make enough money
  • There were life circumstances that “happened” to us
  • We were doing “better” than others so our mess was justifiable
  • It wasn’t fair that we had less “whatever” than other people

We used all sorts of excuses to why our money mess wasn’t our fault, but those excuses never helped us get our finances together. Instead, they served as a convenient excuse for us to keep on spending more than we made.

The Fix

It’s time to face up to the fact that your money mess is your own fault. Yep, even though there were likely some happenings that caused financial havoc that were out of your control, the truth is that if you had been managing your money well from the beginning; avoiding debt and saving cash, that those happenings would’ve been a blip on the radar, or at least, much more easily weathered. But because there were decades spent spending it all and more, you didn’t have the “no debt” or the “plush savings” that would’ve been a major help in overcoming the financial disaster.

Recommended Reading: Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age (Finish Rich Book Series)

We can’t always prevent things like job layoffs, major house repairs, major medical bills and what not, but we can work to put ourselves in a situation where we have little to no debt and a 3-12 month emergency fund that will help cover those unexpecteds.

Why should you do this?

Because, my friend, you deserve financial security. You deserve better than to live every single day of your life worrying about money. You deserve the peace of mind that comes with having no debt and having a plush savings account. You deserve these things, so make a plan and go get them for yourself!

If You Do Not Get Your Financial Sh*t Together, You Will Not Be Okay

Chances are large that at some point in your life, you will face a job layoff or other financial emergency. People have quickly forgotten the hell that many went through when the economy tanked in 2007ish and stayed tanked for a good five years. SO many people lost their homes to foreclosure. Seriously, I want you to think about what would happen to you financially if there was an economic crash tomorrow.

What if you walked into work and *surprise*, you no longer have a job? Would you buck up and chill out, thanks to the fact that you’ve been working hard at crushing debt, now have less in debt payments and have a few thousand saved in an emergency fund?

Or would you go into extreme panic mode, wondering if you’re going to be able to keep your house?

Recommended Reading: Want Something More? Then Do Something Different!

The Fix

Stop telling yourself that it’s okay for you to be living with massive amounts of debt and zero savings. Make a plan today to get out of debt and to start preparing for the what ifs, so that when they come you’ll be in a better situation than you are today.

If You Don’t Start Saving for Retirement, You Have a High Chance of Ending Up Really, Really Poor When You’re Old

Consider these retirement statistics.

  • 75% of Americans nearing retirement in 2010 had less than $30k in retirement savings
  • 49% of middle class workers will be poor or near poor in retirement, living on a food budget of less than $5 a day
  • 27% of Americans will have to keep working as long as possible
  • 3 in 5 Americans say they will delay retirement because they need the money

We put off retirement savings for a long time because retirement seemed “so far away”. Like with debt, we told ourselves we would be “just fine” during retirement even though we had NO plan for how to get to “just fine.”

The truth of the matter is that time flies when you’re having fun (and even when you’re not) and that the YOLO lifestyle you’re living WILL come back to bite you in the tail if you’re not saving for retirement.

The Fix

There are several ways to start ramping up retirement savings, even if you’re working on paying off debt and building an emergency fund at the same time. Here are some ideas.

1. Take Advantage of Your Employer’s 401(k) Program. The great thing about 401(k) programs is that the money is taken out pre-tax and you’ll hardly even notice the difference in your paycheck. Also, many companies offer a match program whereby they match employees’ 401(k) contributions. This is free retirement money, my friends; take advantage of it!

Even if you’re super strapped for cash, start contributing 1% to 2% into your employer’s 401(k) program. Every little bit really does add up. And remember; the closer you are to retirement, the less risky your investment choices should be.

2. Start Putting Something Into an IRA. Anything. Even if it’s just $25 a month. Just get saving, and remember to leave it there to grow and not take it out for YOLO purchases or because you need the money because you’re still living above your means.

3. Commit Whole-Heartedly to Crushing Your Debt. The less debt you have, the less money you’ll need to live on during retirement. While you’re saving in your 401(k) and your IRA, be sure to cut costs wherever you can and put the extra cash toward crushing your debt.

4. Start Contributing to an HSA. HSAs are a great part of a retirement plan as they help you make pre-tax contributions to cover medical expenses at a later date. With the ever-rising cost of Obamacare, saving for medical expenses is a must for everyone.

Luckily, we faced up to this truth and began making a plan for retirement. Even if we didn’t save another dime for retirement, we’ll have a minimum of a half million dollars when we retire, thanks to the fact that we faced up to this truth and made a plan. I pray that you will do the same.

Debt is NOT “Okay as Long as You Can Make the Payments”

For years we told ourselves that we were doing “just fine” in spite of our debt load. We could make our payments just fine and still end up with a (barely) positive number in the checking account at the end of the month, so that meant we were doing well.

But as the old saying goes, the enemy of “great” is “just fine”.

The more debt and debt payments you hold onto, the harder an unexpected event such as a job layoff or medical emergency is going to hit you. The less debt and debt payments you have, and the more savings you have, the easier it is going to be for you to weather a negative financial event. It’s that simple. You just can’t assume that everything will be just fine because you can make the payments and then be in total shock about how you’re going to survive when that negative event happens.

Recommended Reading: Love Your Life, Not Theirs: 7 Money Habits for Living the Life You Want

The Fix

Crush. Your. Debt. NOW. I’ve seen loved one after loved one’s finances spiral from “just fine because we can make the payments” to “Oh sh*t, we’re in BIG trouble” in a matter of weeks because of unexpected happenings. Don’t let that happen to you. Stop telling yourself the lie that you’re doing “just fine” and make a plan today to get out of debt and get your financial sh*t together.

Your Financial Mess Affects More Than Just You

The truth of the matter is that your financial matter doesn’t just affect you. It affects all those around you as well. Here’s how.

  • If you don’t fix your finances now, you leave your kids with the burden of having to support you later on down the line
  • If you don’t fix your finances you run a high risk of becoming a burden on your fellow taxpayers
  • When you struggle financially, your loved ones worry about you
  • When you do a shoddy job of managing your money, you run the risk of passing down your poor money habits down to your kids

My friends, I care about your money state. I don’t want you to have to live as we lived for so many years, stressing out about money all the time. Instead, I want you to experience the peace that comes with having and sticking to a plan that will allow you to eliminate your debt and start building wealth. Money shouldn’t be the main focus of your life, and when you’re managing your money well, it doesn’t have to be.

Are there any financial truths you have/had to face up to? How has facing the music changed your life?

22 comments

  1. So many people have their heads in the sand when it comes to their money. Some are simply ignorant and some are knowingly ignorant. I’ve been both at different times in my life. It is sad and scary and it does take a terrible toll on us, individually and collectively. If you do have a financial mess to fix, knowing it still brings relief and an opportunity to fix it because it is a fixable problem too.

  2. I can’t begin to tell you the amount of stress that has been lifted from our lives now that we have a plan for our money. We don’t fear the unexpected or the walk to the mailbox. There’s no big fight when stuff breaks, because we have a plan. Its so empowering that once you get it, you want everyone to know what you know and share in that success.

  3. Thanks for keeping it real, Laurie! It sickens me that consumer debt and particularly car loans are treated as “normal.” My dad was complacent about living a life of debt when we were growing up and this always bothered me. Fortunately he was able to retire debt-free before 60, but I knew I didn’t want the financial stress I saw my parents go through. It’s not fun!

    • Laurie says:

      That is one of our main goals for getting out of debt, Kalie. I want the kids to know that life can be lived without debt. They’ve seen the stress that debt has caused on us, and I want better for them and their families.

  4. Awesome, honest post, Laurie! You’re right, debt does not have to be a fact of life. And paying it off is never easy, but it is possible. Having all of our consumer debt paid off is a HUGE weight lifted! For several years, we just ignored our debt and continued to add to it. Thankfully we didn’t experience a job loss during that time. If my husband had lost his job, we would have been up a creek with no paddle. Thinking about that is one of the reasons we decided it was time to take control.

    Thanks for the inspiring message!

  5. “49% of middle class workers will be poor or near poor in retirement, living on a food budget of less than $5 a day.” Wow a really shocking and unfortunate statistic. I worry so much for millennials today who are starting with a significant amount of student debt. It’s tough to drag yourself out of debt and I have a feeling many are either already apathetic or will be apathetic when they finally get out of debt – perhaps burnt out is a better word.

    • Laurie says:

      Yes, I really hope people wake up and start treating their debt like the emergency that it is. Struggling with money is no fun at all. 🙁

  6. Such great info Laurie! I think sometimes people need to hear it straight. I would say, sadly, that unless someone is really ready to make a change if often falls on deaf ears. But maybe you can reach one or two people reading right now who are ready! I have one friend who does work for me and she was in a total panic about getting a check from us because she could only pay part of her rent until the check came. She had to convince her landlord that she would have the rest…yet she drives a Porsche. I kid you not Laurie! Another good friend, who is in his 40s like me has NO idea what his net worth is. It’s not even remotely important to him. I just can’t even…

    • Laurie says:

      These are the kind of stories that I wrote this post for. I pray that because I’m a stranger to these people that maybe it will help them to listen? I would hate to think what life would be like for them should an economic crash visit our shores again.

  7. Yes! Finances are such an integral part of someone’s life. What’s really interesting is the social stigma around talking about finances. It’s not really recommended or seen as good talking about money.

    I honestly think it all started with employers making it socially unacceptable to talk about money because wage information can be more public. More information means more power to the employees and employers sure don’t want that. Completely my perspective, I don’t know if it’s true or not.

    Money determines if you can live the next day or not, how can someone not talk about it openly!

    • Laurie says:

      Wise comment, FS! I think you could be right on the money there. Employers would have a very good reason to keep finances private, wouldn’t they!

  8. Love the brutal honesty in this post! It’s a shame that more of us don’t have our financial lives together, there is no reason not to. No excuses please… Excuses are like belly buttons, everyone has one.

  9. Michael says:

    Wow, that was a home run post straight from the heart! It is the blunt truth and couldn’t have been said any better.

    My credit card debt put extreme stress on my marriage. I would prefer not to be there ever again. One of the best things I did was to face my debt early in life and slay it with everything I knew to do. It is one of the best things I have ever done.

    • Laurie says:

      Thanks so much, Michael! Appreciate your kind words. You did a terrific job of crushing your debt early – I know you’ll never allow yourself to go back there again.

  10. I do know someone who needs to get this message, but she does not want to hear it. Some people feel so powerless over their finances, they just build up walls against any type of wisdom like this. I think that Debtors Anonymous is the answer for many who are stubborn in maintaining their debt-ridden lifestyle – but most of them aren’t looking for answers. So frustrating.

    • Laurie says:

      Yeah, it’s tough to watch. I see it too in loved ones. It’s difficult, because you and I have been there and know that victory is possible. Lord, give them ears to hear!

  11. Mackenzie says:

    Having enough money in our retirement years is really important to me. I hear from my parents and my in-laws, how social security doesn’t really go that far, so having enough for later on is a huge concern to me.

    • Laurie says:

      Glad you guys are working on that, Mackenzie. My parents didn’t save enough for retirement either. They’re getting by now, but they have to live on super strict budgets. I don’t want that for Rick and me.

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