Investing For Your Future
Monthly IFYF Investment Message
February 2005
Back to Archived Monthly Investing Messages.
Do post-holiday credit card bills have you worried? One of the common reasons that people cite for not investing for their future is the amount that they owe on loans, credit cards, and other debts. Money that could be invested in IRAs, 401(k)s, and mutual funds is, instead, used to pay for previous spending. Credit is not necessarily good or bad. It depends on how it is used. Take the following quiz to determine whether you are using credit wisely or getting in over your head in debt. Which of the following statements apply to you or your family?
_____ 1. Not counting mortgage or rent payments, monthly consumer credit payments are 15% or more of monthly take-home pay.
_____ 2.You buy things with credit cards that you would not buy if you had to pay cash for them.
_____ 3.You charge day-to-day expenses, like shampoo, instead of paying cash because you do not have the money.
_____ 4.You pay only the minimum amount due on your credit cards each month.
_____ 5.You make so many credit purchases that the amount you owe does not decrease but actually increases from one month to the next.
_____ 6.You take out new loans to pay old ones.
_____ 7.Your family has frequent arguments about money.
_____ 8.You often have to skip some payments to make others.
_____ 9.You hold more than ten credit cards, including bankcards and gasoline and department store cards.
_____ 10.You do not know how much you actually owe.
_____ 11.You borrow money to pay expected expenses such as insurance and taxes.
_____ 12.You have been turned down for a credit card or loan in the last six months.
If you checked three or more of these statements, consider this monthly IFYF message a wake-up call. Take the time to evaluate your use of credit and develop strategies to bring your spending into line with your income (e.g., paying twice the required minimum payment). Your situation is not hopeless, but it will take a commitment to correct the situation and get back on the road to financial security.
Once you have repaid your debts, take the money that you would have paid previously to creditors and invest it. Start small if you have to; say $25 deposited every two weeks to a stock mutual fund. As you repay your creditors one by one, ramp up your investment deposits.