How Money Works- Author Says Stop Using Stimulus Money on Credit Card Debt

Americans are paying down credit card debt with their stimulus money, but one financial author says stop worrying about your credit cards and start hoarding the cash!

Steve Siebold is author of the book ‘How Money Works’ and a self-made millionaire who has interviewed more than 1,300 of the world’s wealthiest people over the last 36 years.

An article in the Wall Street Journal quoting Equifax says that between February and the end of June, total outstanding credit card debt fell by 11%, or $100 billion. It also says April and May saw the largest drops in revolving credit, and fewer people were late with their payments.

“In the current economy, I recommend stockpiling as much cash as possible,” Siebold said. “Your credit can be turned off in no time, but no one can take your cash away from you. Pay the minimum balance on your credit cards in the meantime, but not a penny more and focus on building a reserve of cash.”

In addition, Siebold recommends:

-        Negotiating with your mortgage lender and creditors and explain your job loss and current financial situation. See if you can defer payments or at least reduce them. Even if you have the money you should focus on preserving the cash, so it’s still to your advantage to try and work out a better payment arrangement. Same goes for your car payment, credit cards or any other loan.

-        Inventory your assets and sell for cash, even small items like kid’s toys, garden tools or anything you don’t use or really need. Sell on eBay or other outlets and hide the cash in a safe place in case you need it. The longer the economy suffers, the more everyday items will go on sale. Three months from now, $1,000 in cash may feed your family for a year. 

-        Learn how money works and prepare yourself. The next wave of the Coronavirus may very well hit us in the fall. Get prepared now! Re-evaluate your financial situation and study the basics of personal finance. If you’re lucky enough to have one, contact your financial professional for assistance.

-        Don’t rely on the government or anyone else. Don’t be suckered into bleeding yourself dry of cash and counting on the government for help. No one is coming to the rescue. This pandemic has exposed the incompetence and unpreparedness of both the federal and state governments, and they have neither the money nor the system to save you.  

-        Get ready and excited for the turnaround: Although times may be tough now and it’s hard to imagine, it’s not going to be like this forever. In fact, when the turnaround hits, hold on tight. It may take some time, but eventually business is going to comeback full swing. The self-made wealthy are getting ready. You should be, too!