By John Packard
Many people tell me that no matter how they look at things, they are simply not able to make ends meet. They cannot possibly cut back any more than they already have. Consider the following statistics:
• Half of American households live on less than $46,326 a year, the median household income figure for 2005, according to the U.S. Census Bureau. That inflation-adjusted number hasn’t seen a substantial increase since 1999. One out of five households lives on less than $20,000.
• Twenty-two percent of U.S. respondents in an ACNielsen study of consumers worldwide said they had no spare cash left after paying for basic expenses. That compares to 17% of consumers in Great Britain and 15% in South Korea and Germany.
• Some 37 million people, or 12.6% of the population, live below the federal poverty line, according to the Census Bureau. (That line varies by household size and composition; for a family of three with a minor child, the income limit would be $15,720.)
• Nearly 47 million, or 15.9%, have no health insurance, the Census Bureau reports, and medical bills are a factor in half of all consumer bankruptcies, according to research by Harvard University professor Elizabeth Warren. Those who do have insurance often pay a big price: Two of five adults (43%) who bought health insurance on their own spent more than 10% of their incomes on premiums and family out-of-pocket medical expenses, according to the Commonwealth Fund, which describes itself as a private nonpartisan foundation that supports independent research on health and social issues. When an employer provided the coverage, one of four (24%) of those insured spent more than 10%.
Yes, it is true to see that the stats are sobering and frustrating. These are facts that many of our clients can identify with. Many times I hear, “Yeah, that is me, I cannot possibly cut back any more.� This is unlikely. You can cut back. But what I have discovered is that many people choose not to do so. In addition, many students like to wallow in the victim role. They attract what they think about. In other words their condition is a self fulfilling prophecy. If someone constantly tells themselves that they cannot get ahead, well what happens is exactly that. Prosper is about changing mindsets from one of scarcity to one of prosperity. Here are a couple of suggestions. 1.) Write your goals down. Outline what you want to accomplish financially within the next 12 months. Take baby steps. Don’t make your goal too large to tackle. Work on creating intermediate and longer term goals. 2.) Write down a positive affirmation about your financial condition. Then read and re-read it several times per day. Watch what happens!
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