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This rate is alarming!

The rate of “severe derogatory” balances from student loan debt increased 36 percent from the same time a year ago, according to the latest Equifax National Consumer Credit Trends Report. This news comes on the heels of a Bankrate.com report which revealed that nearly a quarter of U.S. citizens have more credit card debt than savings. While surveying the realm of personal finance, it doesn’t take long to get the common thread: debt is an enormous problem for millions of Americans.

Sound strategies, extensive research and a diversified plan for investing don’t mean much if you’re drowning in debt. Whether it’s through credit cards, student loans or cash advances, debt reigns over millions of Americans, preventing them from building a solid investing portfolio. Before you head into the black, you’ve got to get out of the red. Shedding debt requires discipline, commitment and effective strategies.

Make a Budget

It’s the first step toward financial freedom, but millions of Americans continue to collect and spend revenue without a budget. According to Bankrate.com, 40 percent of surveyed citizens said they didn’t follow monthly spending. Any serious attempt to whittle down debt requires a course of action. Try throwing random sums of money at your debt and you’ll be frustrated by your absence of improvement. A budget enables you to schedule when and how you’ll stop debt, and takes the guess work out of spending. Start with your entire household income and subtract how much you’ll spend on savings, bills, groceries, clothing and entertainment. If you have money left over, send it toward outstanding debt.

Treat as a general guideline and you’ll remain floating on a pile of debt. Stick to it and you’ll drift closer and closer toward financial stability.

Cut Back

Unfortunately, drafting a statement won’t make debt magically disappear. Rather, it gives a realistic view at how you can crawl out from under credit cards, students loans and other sums. The hard part is finding debt payments within that budget. A tip: starting small is better. Take your lunch to work a couple of days a week instead of eating out, hold off on that new stereo system or spend a candle-lit date night at home. On a long enough timeline, these subtle cutbacks can cut into debt.

Maintain Momentum

Unless you win the lottery, inherit a fortune or otherwise come across a large sum of money, reducing debt is a gradual process. Maintain momentum as you pay off day by creating frugal habits. According to Ed Young, pastor of Fellowship church in Texas, creating powerful financial habits is easier said than done. “In today’s world, we think debt is a way of life,” Pastor Young says on his website. It may be a part of our culture, but maintaining debt isn’t a sustainable way of life. Avoid borrowing more money at all costs. With discipline and determination, you can make debt a thing of the past.

Matthew 6:24 reminds us all we cannot serve two masters: God and mammon (money). But Proverbs 28:20 emphasizes the blessings that will come to all faithful men, as long as he does not commit his entire existence to becoming rich. This delicate balance is not difficult to accomplish, since high-risk investments are, for all intents and purposes, gambling. Precious metals are an excellent hedge against inflation and an integral part of a diversified portfolio. The other low-risk, potentially high-reward investment few Americans have even thought about is the foreign exchange market.

A G20 Summit was held in Moscow last month in an attempt to quell the ongoing and increasingly volatile currency wars happening all across the globe. Japanese Prime Minister Shinzo Abe was the primary focus of the meeting, which brought together the finance ministers and central bank governors of 20 countries that control 90 percent of the world’s economy. Abe has already ordered the Bank of Japan to print 12 trillion yen in early January, which immediately caused the Japanese currency to drop to a near 30-month low against the dollar.

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The resolutions we make for the new year generally are related to losing weight, quitting a bad habit or even going to church more. In these times of economic volatility, securing your finances should at least get honorable mention as a 2013 endeavor. Young families tend to dismiss investing as something for middle-age people or out of their financial reach. The following are some great investment ideas which don’t require you to know anything about the Dow Jones Industrial Average or the S&P 500 Index.

Precious Metals

It’s common knowledge that if you own a comic book which only 500 copies exist in the entire world, it is going to be worth quite a bit of money due to its rarity. Contrarily, something that is abundant and easily accessible has little to no value. This concept can be applied when assessing the value of the U.S. dollar. The Federal Reserve continues to print billions of dollars which it says helps stimulate the economy. But the more dollars that are circulating, the less they are worth, which subsequently raises the price of everything (inflation).

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You may be amused by the efforts of some of your friends and neighbors as they try to “chase the return” in the stock market. We all seem to know a day trader or two: someone constantly hunting for the next hot stock, endlessly refreshing browser windows for breaking news and tips from assorted gurus.

Is that the path to making money in stocks? Some people have made money that way, but others do not. Many people eventually tire of the stress involved, and come to regret the emotional decisions that a) invite financial losses, b) stifle the potential for long-term gains.

We all want a terrific return on investment (ROI), but risk management matters just as much in investing, perhaps more. That is why diversification is so important. There are two great reasons to invest across a range of asset classes, even when some are clearly outperforming others.

#1: You have the potential to capture gains in different market climates. If you allocate your invested assets across the breadth of asset classes, you will at least have some percentage of your portfolio assigned to the market’s best-performing sectors on any given trading day. If your portfolio is too heavily weighted in one asset class, or in one stock, its return is riding too heavily on its performance.

So is diversification just a synonym for playing not to lose? No. It isn’t about timidity, but wisdom. While thoughtful diversification doesn’t let you “put it all on black” when shares in a particular sector or asset class soar, it guards against the associated risk of doing so. This leads directly to reason number two…

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Giving to charity doesn’t make you a good person, but it sure helps. Charity should be the luxury of the blessed, and without the generosity of these big-hearted citizens, the world would be a wretched place.

According to TurboTax data, people with an average gross income (AGI) between $30,000 and $50,000 gave around $2,000 to charity last year. Those with an AGI between $50,000 and $100,000 gave a bit more than $2,600 on average, and those making $250,000 or more gave a whopping $28,110 on average. Where do you fall on this spectrum?

Choosing the Right Charity

Selecting the right charity for you should come from your heart first and foremost, but that doesn’t mean you should pull out your checkbook the second a commercial about tortured animals grabs your attention. If you have a soft spot for animals, children, the environment, teaching urban youth to read instead of just throwing a fistful of your income at them, do the research and make sure the non-profit you choose qualifies for tax deductions and is, in fact, what they say they are.

There are plenty of charities that are fake, which makes protecting your charitable finances essential. Sites like Lifelock.com on Crunchbase.com can help you navigate potentially murky waters of the faux non-profit world.

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10 Behaviors worth changing in 2013

Do bad money habits constrain your financial progress? Many people fall into the same financial behavior patterns year after year. If you sometimes succumb to these financial tendencies, the New Year is as good an occasion as any to alter your behavior.

#1: Lending money to family & friends. You may know someone who has lent a few thousand to a sister or brother, a few hundred to an old buddy, and so on. Generosity is a virtue, but personal loans can easily transform into personal financial losses for the lender. If you must loan money to a friend or family member, mention that you will charge interest and set a repayment plan with deadlines. Better yet, don’t do it at all. If your friends or relatives can’t learn to budget, why should you bail them out?

#2: Spending more than you make. Living beyond your means, living on margin, whatever you wish to call it, it is a path toward significant debt. Wealth is seldom made by buying possessions. Today’s flashy material items may become the garage sale junk of 2025. Yet, the trend continues: a 2012 Federal Reserve Survey of Consumer Finances calculated that just 52% of American households earn more money than they spend.

#3: Saving little or nothing. Good savers build emergency funds, have money to invest and compound, and leave the stress of living paycheck-to-paycheck behind. If you can’t put extra money away, there is another way to get some: a second job. Even working 15-20 hours more per week could make a big difference. The problem is far too common: a CreditDonkey.com survey of 1,105 households last fall found that 41% of respondents had less than $500 in savings. In another disturbing detail, 54% of the respondents had no savings strategy.

#4: Living without a budget. You may make enough money that you don’t feel you need to budget. In truth, few of us are really that wealthy. In calculating a budget, you may find opportunities for savings and detect wasteful spending.

#5: Frivolous spending. Advertisers can make us feel as if we have sudden needs; needs we must respond to, needs that can only be met via the purchase of a product. See their ploys for what they are. Think twice before spending impulsively.

#6: Not using cash often enough. No one can deny that the world runs on credit, but that doesn’t mean your household should. Pay with cash as often as your budget allows.

#7: Gambling. Remember when people had to go to Atlantic City or Nevada to play blackjack or slots? Today, behemoth casinos are as common as major airports; most metro areas seem to have one or be within an hour’s drive of one. If you don’t like smoke and crowds, you can always play the lottery. There are many glamorous ways to lose money while having “fun”. The bottom line: losing money is not fun. All it takes is willpower to stop gambling. If an addiction has overruled your willpower, seek help.

#8: Inadequate financial literacy. Is the financial world boring? To many people, it is. The Wall Street Journal is not exactly Rolling Stone, and The Economist is hardly light reading. You don’t have to start there, however: great, readable and even entertaining websites filled with useful financial information abound. Reading an article per day on these websites could help you greatly increase your financial understanding if you feel it is lacking.

#9: Not contributing to IRAs or workplace retirement plans. Even with all the complaints about 401(k)s and the low annual limits on traditional and Roth IRA contributions, these retirement savings vehicles offer you remarkable wealth-building opportunities. The earlier you contribute to them, the better; the more you contribute to them, the more compounding of those invested assets you may potentially realize.

#10: DIY retirement planning. Those who plan for retirement without the help of professionals leave themselves open to abrupt, emotional investing mistakes and tax and estate planning oversights. Another common tendency is to vastly underestimate the amount of money needed for the future. Few people have the time to amass the knowledge and skill set possessed by a financial services professional with years of experience. Instead of flirting with trial and error, see a professional for insight.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.