Wednesday, May 14, 2008; Posted: 2:14 p.m. (CDT)
We have snapshot of American debt and it shows a troubling picture. Statistics show about 43 percent of American families spend more than they earn each year. In addition, average households carry some $8,000 in credit card debt and personal bankruptcies have doubled in the past decade.
Tom Phillips, the President of T.S. Phillips Investments, has been involved in the financial world for 31 years.
Phillips says, "Before you even think about investing, you really need to have your debt under control."
He suggests taking advantage of credit card offers that say no interest for a year.
"If you move a $5,000 balance to one of these no interest credit cards and it's a 12 month deal, you make sure you pay if off in 12 months," says Phillips. "Otherwise, they are going to come back and hit you for all of that back interest and you have accomplished nothing."
Like all experts, he recommends a budget.
Here's an example. If you make $2,000 a month, spend $1200 on bills and are left with $800 in disposable income. Your next step is to take a calendar and divide the disposable income by the number of days in the month. If there are 31 days that would be $25.80 a day.
"By breaking it down into pieces like that you get a better picture of how much you can spend a day and how much room you really have," says Phillips.
Then, he says it's time to think about investing.
He says, "One thing for sure, if you're working for a company that matches your 401K you really need to do that."
The financial guru also recommends getting started with a mutual fund.
"You might just put $50 or $100 aside a month and it doesn't sound like much but it really adds up," says Phillips.
They're steps to get you out of debt and on the road to investing that money you work hard to make.
