Digging A Hole, Or Filling It In

capture-4The math of money flow is very simple:

“Money In” – “Money Out” = Savings (Debt)

If it’s so simple, why do so many people get themselves into large amounts of debt in the first place?

  • Credit cards – $1000’s of dollars spent, magically becomes a low monthly payment
  • Job change  – Layoff, back to college, health, ……..
  • Environment change – starting a family, marriage, divorce, ……


In the table above from nerdwallet, the total average household debt from credit cards, car loans and student loans is: $91,075! A shocking number.


There is not much to say about credit cards. They have become so ubiquitous in today’s culture, that it appears to be a necessity. Unless you are conscientious in paying off the balance every month, then they must never be used, nor applied for. If you are either starting off your journey in life, or are in the position of digging a bigger and bigger hole – cut them up now.

Both job change and environment change can be dealt with together. They are either reducing your “Money In”, or increasing your “Money Out”. Every case is different and should be analyzed with much thought an due process. However, the answer will always be the same: get another/better paying job and/or sell stuff you don’t need and reduce your costs.

The first consideration is for you to work on a detailed budget for each month and then stick to that budget. I include a simple budgeting tool here.

Once you get back on the positive side of the equation (saving), then you can start worrying if I am saving enough!


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