Welcome to 2023! Good-bye 2022…thankfully! Unfortunately, going in to 2023 the world is a mess, our country is divided like never before and the economy is an absolute disaster. And, as usual, personal finance advice for the New Year is all the rage. No matter the device, it’s almost impossible to avoid some financial expert promising to put your financial life on a new and improved trajectory…IF you can follow their advice.
Traditional Financial Advice
The funny thing about traditional, personal finance advice, it’s been around for decades. There are volumes of it. And if you do a little research, even as far back as the 1980’s, you will notice financial advice today has changed very little over time.
Does this sound familiar? Earn more, spend less. Budget, budget, then tighten the budget some more…be disciplined! Avoid debt like the plague…if you can! But if you do carry debt, having the lowest interest rate and lowest payment will position you as a financial savant. Again, sound familiar? It should because in some form or fashion, for decades this is what we’ve been taught when it comes to managing our money. This model of banking and borrowing hasn’t changed for as long as any of us can remember.
Imagine if the auto industry, computer industry or cell phones were stuck in the 80’s and 90’s? We’d still be driving muscle cars, we’d be stuck at a desk to use a computer and we’d be toting our cell phones on our shoulders…with no picture capability god forbid. Obviously, we’ve made great strides in those arenas. Technology and the internet has changed everything when it comes to the speed and convenience of just about everything we do. But when it comes to our money, technology itself hasn’t improved our bottom line. Technology is the Easy Button to money management, but it doesn’t help us get any closer to retirement, being debt free or whatever financial goals we might have. Technology has actually made us less aware of our finances.
Here’s an important question…if traditional advice is the way to go then why are ‘We’ in twice as much debt today than we were in 2003? In 2003 we owed $8T in household and non-household debt. At the beginning of 2023 we owe $16T! Granted, much of that is new debt from new consumers financing their lives, but a large percentage of that debt is unpaid long term debt, and perpetual debt in the case of rate and payment chasers who keep extending payoff with every new interest rate. This increase in debt can be directly attributed to the traditional advice we’ve been seeing for years. Shouldn’t this tell us something about the advice we receive and act upon?
Here’s what these numbers ultimately reveal; if we continue to follow traditional financial advice, our future won’t look much different tomorrow or a year from now than it did yesterday, last year, or even five years ago. Financial advice today is outdated, antiquated and has left us spinning our wheels. Traditional advice perpetuates our financial problems and unfortunately, it’s being passed from generation to generation. How can our kids have it better than we do if we teach them the same stuff?
Here is another troublesome fact about our money. In America today, 35% – 45% of our income is obligated to debt payments. 35% – 45%!? That’s probably more than what it costs you for basic needs. These numbers look this way because we follow traditional financial advice. Interestingly though, neither the debt itself nor the corresponding interest rates is the real problem. The real problem is how we are repaying all this debt, or the terms of repayment. The obligatory, never-ending monthly payments are crushing our monthly paychecks and will continue to do so throughout our adult lives if something doesn’t change.
Question the status quo
Smart money in 2023 starts with questioning the status quo…traditional advice…and examines the inherent faults and pitfalls of traditional banking. Smart money in 2023 involves a deep dive into HOW a real banking strategy works in comparison to traditional practices.
Do you, would you like to learn why traditional advice is often times bad advice?
Do you, would you like to learn why a long-term rate and payment strategy is financially futile?
Do you, would you like to learn how a better banking model will change our life?
Make 2023 the year you get smarter about money. Not consumer-banking smart. That’s what traditional advice caters to and it’s what’s driven you here. Get banker smart.
If you’re reading this blog then you are undoubtedly seeking to improve your financial situation. If you are looking to pay back debt, add to your retirement account or you just want to get more out of your hard earned paycheck then visit the link below to schedule a 15-20 minute education call.