In a recent study by the Treasury department of Education, they found that students are averaging a 69% in financial literacy. From the last time I checked, at 69% was a failing grade when I was in grade school.
It’s clear that financial education should be taught more in school, but what happens when it’s too late? Unfortunately, most consumers don’t take financial education as seriously as they should until they have to deal with it. I don’t blame anyone who lacks financial literacy, as a matter of fact, it wasn’t until I was buried in debt myself before I really started to take it seriously.
As the saying goes, “It’s better late than never.” Most Americans have been in debt at one point in their lives, but the key lesson is to never become a repeat offender. Some of the most successful people have failed dozens of time before succeeding, and it’s no different in the finance world.
If you find yourself buried in debt, here are some steps you can do to alleviate the situation:
- Understand how you got there: Your debt didn’t magically happen overnight. Did you simply overspend? Was it due to not having a rainy day fund? Or perhaps you lost your job and didn’t have any other choice but to use your credit card. Regardless of the reason, it’s important to figure out how you ended up in debt, and then take steps to figure out a game plan of how to prepare for the same situation.
- Read your statements: Next time you get your credit card statement in the mail, take a minute to actually open your statement instead of putting it in the rest of the junk mail pile. Carefully look at the interest you were charged versus the minimum payment due. You’ll notice that the minimum payment consists of mostly interest charges. It’s also important to look over every single transaction to make sure you recognize them and to make sure you’re still using any subscription services that you signed up for.
- Second guess your budget: I encourage you to take a step back and look at your past two months of bank statements. Itemize every single transaction and figure out where you’re spending most of your money. Next, ask yourself if you could live without some of these expenses.
- Read Financial Blogs: Reading is the cheapest way to gain knowledge. There are massive amounts of personal finance blogs that will help you become more financially literate. Some of the blogs are actually written by bloggers who might be in a similar situation. It can be relieving to know that you’re not the only person in the world facing the same problem, because let’s face it, you’re not! If you’re looking for some personal finance blogs, you can check out Careful Cents or 20s Finance.
If you’re struggling to pay off your debts, take a step back and take a deep breath. The last thing you want to do is to make decisions that are clouded with confusion. It’s never too late to learn more about personal finances, it’s a subject matter that will be invaluable for the rest of your life.