A surprising number of top earning Americans are swimming in debt and even flirting with bankruptcy, according to a new Wall Street Journal article. Without deliberate financial planning, even a large salary can still leave you falling short.
One woman, 40-year-old Sylvia Flores, was making more than $200,000 a year but living well beyond her means.
“I spent way more than I made, but I didn’t really think about it because I was making good money,” Flores tells the source. “I felt entitled.”
She’s not the only one. The Journal reports that one Michigan bankruptcy attorney is seeing a significant rise in the number of high earners in hot financial waters.
If you are pulling in a large salary but lack a specific financial plan, you could find yourself in similar straits, especially in the case of an unexpected crisis such as job loss, illness or accident. Here are some tips for getting back on track:
- If they match, contribute. If your employer offers any type of retirement plan start putting money away as soon as possible. As well, if they match your contribution then you better be contributing up to the amount that they match. If not your throwing away free money.
- Find a financial Planner. A reputable financial planner can help you crunch the numbers and determine a plan of action moving forward. Preferably one who is fee based and not commission based. That way he gets paid when your money grows not when you make a contribution.
- Near retirement? Think about an annuity. No matter how much money you make, if you don’t plan for the future your family could end up in serious financial trouble. Annuities have some bad mojo around them for some reason. When I ask people why they hate annuities, not a single person can tell me why. I think it may just be something they have heard for so long that they think it’s true.
Did you know an annuity can guarantee your income for life. Even if your money runs dry! It’s the only investment vehicle that can make this guarantee. Having all your money in a 401k, IRA, or cd is a great way to outlive your money. An annuity will make sure you never outlive your money.
- Pay off all credit cards and debt. According to credit bureau TransUnion, the average outstanding credit card debt per American borrower was $5,234. For many top earners, it was likely significantly higher. Those pulling in large salaries are at particular risk of amassing crippling debt, as it is often easy for them to borrow out large amounts.
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