How to Manage Personal Finances Made Easy & Avoiding the College Debt Trap

By Robert Guillaume

Millions of individuals find themselves struggling to manage their personal finances. The debt of individuals from credit cards, student loans, car payments, and other indebtedness is in the trillions of dollars. Due to the lack of basic personal finance management skills many individuals feel trapped in a revolving door of living paycheck to paycheck and never overcoming debt. This book simply and completely walks the reader through proven personal financial management principles by using clear and precise examples that enable the reader to become more proficient at managing their financial position.

• Language: English
• Publisher: BookBaby
• Release date: Sep 28, 2020
• ISBN: 9781098330750

Book preview

© 2020 by Robert Guillaume

All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review.

ISBN (Print Edition): 978-1-09833-074-3

ISBN (eBook Edition): 978-1-09833-075-0

Contents

Preface

FINANCIAL MANAGEMENT: Statistics and Problems

Living within your Financial means

UNDERSTANDING YOUR PAYCHECK

CONSTRUCTING a PERSONAL BUDGET

UNDERSTANDING & MANAGING BANK STATEMENTS

PROPERLY USING AND MANAGING CREDIT CARDS

FINANCIAL STATEMENT & NET WORTH

CALCULATING DEBT-TO-INOME RATIO

UNDERSTANDING YOUR CREDIT SCORE

QUICK LOANS & CASH ADVANCES

SECURING YOUR FINANCIAL INFORMATION

UNDERSTANDING INSURANCE AND MANAGING IT CORRECTLY

FINANCIAL PLANNING FOR RETIREMENT

AVOIDING THE COLLEGE DEBT TRAP

MANAGING FINANCIAL ADVERSITY & DIFFICULTIES

REFERENCES

Preface

Millions of Americans struggle to successfully manage their personal finances. Financial data reveal that this problem occurs across all income levels, races, and genders. (Paul, 2018) Financial struggles and the lack of meaningful individual financial management practices affect every generation from boomers, Gen X, to the millennials. (Cardilla)

We are not born with the inherent knowledge of how to manage our personal finances. We have personal skills which we use every day. Most of these skills we have been taught or mentored to use and they were accomplished through a learning process. Correctly managing our personal finances is also a learning process. American schools spend time, money, and effort to ensure that students pass standardized testing in order to justify the No Child Left Behind Act, school ratings, and school accreditation. Sadly, factual data of America’s society indicates that millions of young people are being left behind and personal finance management is no longer relevant in American schools. Colleges and universities are business machines that have no qualms in taking student loan funds for a college education. Sadly, millions of college graduates lack the basic knowledge and skill required to correctly manage their personal finances. Lacking the knowledge of managing personal finances adds to the problem of delinquent student loans.

Perhaps there are individuals who are fortunate to learn about financial management through their parents or guardians, but this aspect of training is extremely rare. This book will help bridge the gap between the lack of knowledge and the skill required to successfully understand and correctly manage personal finances.

In America, the gap between the financial haves and have nots is widening. According to Quartz, The international organization, UNISEF, states that 23.1% of children in the United States live in poverty. Wealth inequality is an even wider gap, between the top 10% richest in the United States and the lower, poor 10%. (Martin, 2018) Situations beyond an individual’s control can place them in a position of financial hardship. Job loss, personal disability, serious illness, and other personal hardships can easily create a difficult financial position. Factors such as the high cost of medical care and pharmaceutical drugs in the United States, have become runaway trains that negatively affects the financial position of millions of Americans.

Unfortunately, in America, there are those individuals who would rather take advantage of the 79 government-initiated assistance programs, costing taxpayers 1 trillion dollars annually, than seek viable employment. These government-initiated assistance programs provide assistance for housing, food, medical services, educational benefits (such as free meals and books to children), and much more. I have witnessed parents of school children using free and/or reduced government assistance for school meals and textbooks while both they and their children carry $800 cell phones. For individuals who take advantage of government assistance programs and then spend money on expensive personal items, the principles of managing personal finances may not apply.

Another group of individuals in the American society that are facing difficult financial management is the retired community. Many retired individuals who have worked their entire life struggle to make ends meet. In 2019, the Social Security Administration stated that there would be a cost of living increase in 2020. However, in 2020, the government also increased the cost of Medicare Part B premiums deducted from the Social Security of retirees. The result raised retirement social security benefits on one hand and took that financial increase away with the other hand. Sadly, retirees in America, receive little to no additional net cost of living increases in social security benefits to meet the rising cost of living. At a time when retirees are struggling to make ends meet, pharmaceutical companies and the medical industry, who serve many retirees, continue to boast of billion-dollar profits as medical costs soar.

The new year of 2020 witnessed a world stricken with the pandemic of Covid-19. The devastation of this virus was physiological, social, and economic. The economic shutdown in not only the United States but other nations as well created a ripple effect, resulting in the loss of millions of jobs. Individuals found it difficult to meet basic needs, such as buying food. In to meeting basic needs, there were financial challenges to meet expenses such as rent/mortgage, utilities, car payments, and medical and pharmaceutical expenses, BMV automobile registrations, property tax bills, insurance bills, and other expenses.

Sadly, many individuals discovered that losing their job meant losing their medical coverage benefits. Persons saddled with unforgivable student loan payments were placed in a position of a demanding debt and no job.

Government financial assistance provided during this crisis was only a Band-Aid. For many people, the assistance was too little or too late to be of any major benefit to their financial dilemma. Unfortunately, during times of financial hardship, people compound their financial difficulties by utilizing their only means to buy groceries and meet expenses—the credit card. Maxing out the credit card will only leave a major debt to repay. During times of financial hardship where necessities must be met, avoid spending on unneeded wants.

Living with the economic ramifications of Covid-19 is proof that the basic principles of personal financial management explained in this book are a must for every individual. Unlike the pie-in-the-sky 50–30–20 rule that has no practicality during times of financial hardship, the economic principles and skills