Few families have escaped the consequences of the depressed economy that dominated the news until recently, or avoided the pinch of either debt or high health care costs. Family financial issues can lead to divorce and other emotional woes, which add to the economic distress of those involved.
Solving family financial problems takes dedicated effort on behalf of all involved. With diligence and good planning, families can break free of the fiscal troubles that plague them. Here are three top money issues modern families face, as well as ways to deal with them.
1. Insufficient household income to meet financial obligations
One of the simplest yet most prevalent issues facing families is a household income insufficient to pay for all expenses. Unemployment, underemployment, high childcare costs, and other factors may create a situation where families feel unable to get ahead. In such situations, saving becomes impossible, and unmanageable debt is difficult to avoid. To escape the low-income trap, examine your monthly expenses as well as expenditures. A hard, honest look at unnecessary spending vs. necessary expenses can help you to lower your monthly commitments. You may also wish to downsize your housing, choose public transit over driving, and plan your meals so you eat out less.
2. Overabundance of debt
Debt comes in many forms. Credit card debt has become far more common, as families supplement insufficient income with credit to make ends meet. Student loans often pose a real problem to those starting out in life. Medical debt follows high health care costs. Many people with too much debt can only afford to pay the interest on the account, rather than the principle, which can turn into a vicious cycle.
The only way to escape the cycle is to make paying off debt a priority. Pay off the accounts with the highest interest rate first, then move on to the next. Pay more than the minimum amount to make headway into the principle instead of paying only the interest. As tempting as it may be, avoid going further into debt while you pay off what you already owe.
3. Lack of agreement in financial values
In many households, one partner is inclined to save, while the other may be a spender. This can create a disparity in how both sides handle expenditures. One may hide purchases, or make big purchases without consulting the other, to avoid disagreements. A lack of honest communication then creates large financial problems that could have been avoided.
It is important for both partners to get on the same page regarding financial matters. Agree to discuss large purchases in advance. Set a household budget and stick to it so each partner has realistic expectations. Create compromises whenever possible, and take steps to avoid heated arguments when honest communication will be much more productive.
Get back on track with our help
If you are considering ways of solving financial problems, and you have considered selling an annuity or structured settlement payments to alleviate debt, contact Novation Settlement Solutions today. Our experts have years of experience in the sale of structured settlement payments, and will be happy to craft a solution that meets your specific needs. Novation is not a financial advisor or consultant and strongly recommends that you speak to a lawyer or accountant before making any significant financial decisions.
*Novation is not a financial advisor or consultant and strongly recommends that you speak to a lawyer or accountant before making any significant financial decisions.