• By age 65, 96% of Americans will either be dead or dead broke! Only 3% will reach financial independence, while only 1% will become rich.

• According to the Wall Street Journal, a staggering 70% of Americans live paycheck to paycheck.

• The American Bankruptcy Institute lists over 2 million bankruptcies in 2005, a huge 30% increase over 2004 and more than 98% were personal.

• According to the Department of Commerce, the American personal savings rate has fallen to an unprecedented MINUS 2.2%.

• USA Today reports that U.S. homeowner foreclosure filings in 2007 increased 68% over 2006.
  

• The average household credit card debt has reached a record $9,882, according to a survey released by cardtrak.com.

• The average number of bank cards per household is 19.3—typically 8 bank cards, 8 retail cards and 3 debit cards, according to a CNN-Money report.

• Bank card delinquencies have reached an all-time high based on a study by consumerflow.com.

• According to a General Accounting Office (GAO) report, only one-third of American workers were participating in a retirement plan. Of those workers participating, the average account balance was only $22,800.

• The number one cause of divorce in American today is arguments over money.

• According to a survey taken by the Mental Health Weekly Digest, Americans say money is the number one cause of stress.

The general theme illustrated by these disturbing statistics is an American culture laden with uncontrollable debt not only at a governmental level but also at a personal level. Unfortunately, we are a nation of spenders, not savers and the trends seem to be getting worse.

Now days with more second marriages, it’s critical that couples get on “the same page” with their finances. Communicating and coming to an agreement on how money is to be spent is paramount. However, this is only the beginning. Predominately, couples need personal financial advice but mainly with money planning and money management-saving more and spending less. Once this aspect of financial planning is under control, the doors can open and lead to other areas of personal finance, like retirement, college, investment and estate planning.

Financial advice can come at a cost by way of fees, but sometimes free financial advice is available.

One major reason why people remain chained to debt and never build wealth is due to car or other vehicle payments.

Aside from a home mortgage payment, debt obligations on vehicles rank as a top “income eater” for most American consumers.

Here is a common scenario involving a leased vehicle.  Let’s say, for example, you lease a $30,000 auto for six years. Allowing for taxes and insurance, your monthly payment will probably be close to $400. At the end of the lease period $28,800 in vehicle “rent” has been paid. Chances are good that another vehicle will be leased for a new six-year term with an equivalent amount or more going down the drain. A typical statement heard frequently is, “I’ll always have a car payment.” These words don’t have to be self-fulfilling.  

The average millionaire reaches this financial pinnacle because the vast majority avoid being chained to a monthly car payment. Wouldn’t you prefer having $400 eventually going into your personal savings or investment account instead of lining the pockets of a leasing company?

Here is an example of a strategy that can help minimize debt load and eliminate car payments forever:

Step One-At the end of your current lease term, purchase a quality used vehicle for $6,000. Finance it over four years. Assuming an interest rate of 6.5%, the monthly payment will be $151. Let’s round it to $170 to account for taxes and insurance.

Step Two-Subtract the auto payment of $170 from the previous monthly lease payment of $400. The difference is $230. Put this monthly amount into a savings or money market account. At the end of four years, assuming a modest interest rate of 5%, your total savings should be around $12,200.

Step Three-After the initial four-year period, sell your paid-for used vehicle and purchase a later-model used vehicle for $10,000 cash from your savings account, leaving a balance of $2,200. Continue to save $400 per month for another four years. The entire amount now goes into your savings account. At 5% interest, the amount will grow to around $24,000 before taxes.

Step Four-Repeat this strategy of upgrading to newer vehicles and paying cash every four years while simultaneously accumulating a substantial savings nest egg.

The transition from vehicle leasing to auto ownership takes some discipline and persistence. Is it worth the effort? Absolutely. Driving debt free vehicles is much easier on the pocketbook and you’ll enjoy great peace of mind.

Answer the following 25 debt-related questions. Total your YES points. Then, find your Debt Range at the bottom to determine the likelihood of succumbing to debt.

-  A collection agency has contacted me about unpaid bills (10 points)
-  I have one or more leased vehicles (5 points)
-  I am making some minimum monthly payments on credit card debt (5 points)
-  I charge purchases to credit cards that were previously paid for in cash (5 points)
-  I have elected to not carry health insurance (10 points)
-  I have elected to not carry vehicle insurance (10 points)
-  I have elected to not carry homeowners or renters insurance (10 points)
-  I worry or lose sleep over my financial situation (5 points)
-  My wages are being garnished or assigned (10 points)
-  I skip credit card payments in order to pay for food, shelter or utilities (10 points)
-  I am behind in paying for housing, vehicle or utilities (10 points)
-  I am occasionally late in paying bills or sometimes incur late fees (5 points)
-  Family relationships are strained as a result of money problems (5 points)
-  I borrow or transfer money in order to pay bills (5 points)
-  40% or more of take-home pay goes to pay off debt (10 points)
-  I do not have at least 3 months living expenses held in savings (10 points)
-  I have given thought to filing for bankruptcy (10 points)
-  I have thought about starting a debt consolidation plan (5 points)
-  I use or have used “cash advance” or “payday loan” services (5 points)
-  I use a home equity line of credit to pay credit card debt or other bills (5 points)
-  My debts are increasing while my income is the same or decreasing (5 points)
-  I am in the process of or near foreclosure or property repossession (10 points)
-  A money-spending plan or budget is something I do not use (5 points)
-  My credit cards are at or near the spending limits (10 points)
-  I don’t balance my checkbook each month (5 points)

Total your YES” POINTS to determine your Point Range indicated below.

POINT RANGE:
-  0-15 Congratulations! You appear to be doing a good job of controlling your debt and managing your finances.  Being debt free can eventually lead to personal financial freedom.
-  20-35 You may be headed down the proper financial path but a review by a qualified financial planner might be a good idea.
-  40-65 Your financial condition may be a concern. A financial assessment by a licensed financial planner is recommended.
-  70-95 Your financial condition could be serious. Debt counseling help is something you should seriously consider.
-  100-185 Your financial condition may be critical. Debt counseling help is essential.

Today, many Americans find themselves in a financial crisis.

Personal bankruptcies are being declared in record numbers with one out of every 100 families experiencing this tragic legal process, according to a survey conducted by American Express.
Although the stigma has lessened, the effects can be long-lasting. Getting a job or an insurance policy can be very difficult if personal records are marred by bankruptcy.

Acquiring material possessions, taking trips to popular vacation destinations or dining out regularly at restaurants will eventually lead to faded memories. But the aftereffects of excessive credit card charges can linger for decades due to the power of compound interest. Paying three to four times the original purchase amount in fees and interest charges is a definite possibility. Making minimum payments on credit cards or other unsecured debt will eventually bury consumers in debt quicksand.

Here are six tips that can help to completely eliminate personal debt if individuals are willing to make some lifestyle changes:

-Itemize debts from the smallest balance to the largest regardless of the interest rates. List the minimum amounts due on each bill. Make the largest payment possible on the smallest debt and make minimum payments on all other consumer debt. Once Debt #1 is fully paid, apply the payment from Debt #1 to Debt #2 (plus its minimum payment). Work through each debt obligation using this strategy until all debt is fully paid. Some financial advisors would suggest reducing high interest rate balances first but the goal here is to gain pay-off victories and to keep momentum rather than being concerned with interest rates. Attempting to pay-off a large, high interest rate balance first could lead to frustration and diffuse any good intentions to eliminate debt.

-Cut up the credit cards. This will take some courage but it’s necessary in order to get out of debt completely. If a plastic card is necessary, consider a debit card which acts like cash, not credit.

-Don’t borrow by establishing a home equity line of credit. The inability to make these loan payments, could eventually lead to a home going into foreclosure.

-Create a money spending plan (commonly known as a budget) based on the “10-10-80″ formula. The first 10% goes to charitable organizations or to a place of worship. The next 10% goes to personal savings. The final 80% is used to pay for basic living expenses. Keep in mind, that these are ideal percentages. Consider lower percentages to start if it’s difficult to give or save 10%. The importance is in the order, giving, saving, and spending.

-PAY CASH for things. No cash means no purchase.

-Get debt counseling but be cautious of credit counseling agencies, debt management plans (DMP), debt settlement or debt consolidation companies. There are too many predatory “debt counseling” companies looking to make a fast buck at someone’s expense. The best approach is to consult with a financial planner, preferably a CERTIFIED FINANCIAL PLANNER™ professional (CFP®). These individuals have a client’s welfare as their top priority. Their fee is a small price to pay if it means getting out of debt permanently.

Making the transition from a credit card debt lifestyle to cash-basis living takes time, effort and discipline but the rewards make it worthwhile.

Digging out of a debt hole requires a change in mindset. If financially distressed individuals are willing to commit to change, the road can eventually lead to financial freedom and peace of mind.