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What Makes Business Sense Makes Personal Sense

Posted by : Premraj | Posted on : Wednesday, December 13, 2017


Whenever we read about macroeconomic data, we tend to assume there is a disconnect between what happens there, and what happens in our personal financial affairs. However, nothing could be further from the truth. As a case in point, consider the US national debt. Currently, the US national debt is $20,596,854,000,235. By the time you’ve read that, the figure has ticked up substantially.

We may consider that somebody else’s problem, but the reality is that it is a societal problem. How so? That national debt translates into an average debt per citizen of $63,104. And if you’re working, that debt burden amounts to $170,424 per taxpayer. The US national debt is somewhat of an abstract concept, even on a per family, or per taxpayer level.

From Macro to Micro: The Story of Big Savings

To better understand the implications of a debt burden, it is a good idea to evaluate US household debt. The New York Times and Forbes recently ran op-eds indicating the burgeoning levels of the US household debt. What figure are we looking at? $13 trillion. One of the biggest bugbears in the spiralling household debt is the subprime auto loans market.

According to stats, US household debt is now at record highs, and has surpassed levels reached during the global financial crisis of 2007/2008. By the end of Q3 2017, household debt increased by 0.9% Q-on-Q. This is also the 13th successive period of household debt increases. From a personal perspective, the level of household debt has added $280 billion to the 2008 levels and is 16.2% higher than the Q2 2013 low. Simply put, this means that the debt burden on typical US households is increasing. These increases are felt the most in the following areas:

Automobile Loans – up $24 billion, and now topping $1.2 trillion overall. Delinquencies have increased to 4 percentage points.

Student Loans – up 11.2%, at $1.4 trillion and rising.

Mortgage Loans – Now account for a whopping $8.7 trillion of total US household debt.

Outstanding Credit Card Balances – have increased by $24 billion, with a 90+ days delinquency rate of 4.6 percent.

It is the bad debt that is deeply concerning for macroeconomic purposes, and for personal financial reasons. Bad debt encompasses any debt that is not related to education or real estate. It is typically limited to credit card debt; however, it can include spending on automobile loans as well. Over the years, we have seen a gradual, yet definite, increase in credit card-related expenses, debt and processing fees.

For many folks, credit cards are an indispensable part of everyday life and it is foolhardy to simply suggest that people avoid them altogether. Provided credit card debt is managed responsibly, payments are regularly made, and the right credit card is selected, they can be a valuable resource to individuals.

Business to Personal Savings

If you find yourself in the self-employed arena, you can easily apply sensible credit card business skills for personal financial benefit. For example, the more money you save through accepting customer payments via debit card, credit card and other online payments options, the more money you have in your pocket.

To this end, various credit card processing options are available. Stay-at-home moms, dads and millennials are also finding that home-based business opportunities are a fantastic way of creating a personal safety net. Whether it’s goods or services being offered as a business opportunity, it’s always a clever idea to minimize processing fees so as to maximize profits.

Businesses can use a full range of equipment and services for e-commerce operations to enjoy discounted rates, transparent pricing and cost savings. By paying less for each transaction that is processed, business owners (entrepreneurs and one-person businesses) can save more money in a personal capacity as well.

Money savings advice is vital in today’s economy. With a tightening of monetary policy in the US, the UK, Canada and elsewhere, we can expect inflationary pressures to creep up, and conservative spending patents to start emerging. That’s why it’s important to keep more of every sale, and give less to payments processing companies.

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