The Carr Report: Balancing our net income with our gross habits

by Damon Carr, For New Pittsburgh Courier

If your outflow exceeds your income then your upkeep will be your downfall. 

~ Facebook meme

Damon says: The math is easy. Your income has to exceed your outgo in order for you to have a favorable outcome. It’s not the math we wrestle with,  it’s balancing our net income with our gross habits that trip us up.


Coach, what’s your advice on the approaching interest rate hike? Some folks have HAD to use their credit cards to stay afloat. I figured I’d pose this question so that people in that predicament can get a more educated answer and not feel so ashamed or uncomfortable asking.

~ Irene

Damon says:  My advice is the same regardless of a low or high interest rate environment: Use credit only when absolutely necessary!


We’re living in some perilous times. We’re in the midst of an inflationary economy. At the time of this writing, the inflation rate is currently at 9.1 percent. That’s the highest the inflation rate has been since 1981.  I recently wrote an article titled, “Inflationary economy reduces discretionary income.” Google it. It’s a good read. Prices have risen within every segment of our economy. We feel it in our everyday lives. We feel it at the gas pump. We feel it at the grocery store. Our personal income hasn’t kept pace with inflation. Higher prices coupled with stagnant income means less money available after you pay the bills, gas up the car, and purchase groceries.

People are feeling the squeeze. As you alluded to, people are turning to credit cards and credit in general to stay afloat. To stave off inflation and higher cost, the Federal Reserve has been raising the interest rate. They want to see the prices come back down to normal in every segment of the economy. The theory is, a higher interest rate will curtail spending which reduces demand for consumer goods and services. Reduced demand decreases prices.

Sounds good in theory. From an everyday consumer perspective, they see higher prices due to inflation and higher interest cost due to rising interest rates. They feel like they’ve been hit with a double whammy. Here’s why. Inflation in and of itself isn’t what caused people to start using credit cards to stay afloat. They were already using credit cards to stay afloat. In other words, people have always and will continue to use credit cards as a supplement to their income. The fact that the national and global economy as a whole is struggling, allows people to place the blame on the general economy as opposed to their personal economy. As the meme stated, if your outflow exceeds your income, then your upkeep will be your downfall. 

The truth of the matter is, people are not staying afloat when they’re using credit cards as a supplement to their income. They’re digging themselves into a deeper hole.  

We can’t control the national economy. We do have control and influence over our personal economy. In order to take control of our personal economy, the real issue needs to be addressed. We have to reconcile our net income with our gross habits. What would make a person turn to credit cards to stay afloat? The answer is generally 1 of 4 things or a combination thereof:

  • Low to moderate earnings
  • Overspending
  • Undersaving
  • Poor money management

If a person focuses on and fixes one or more of these core issues, they’ll reduce or eliminate the need to turn to credit cards to stay afloat.


Compounding Interest is your staircase to wealth!

One penny doubled and compounded daily for 30-days will grow to $5mm. The likelihood of someone doubling and compounding their money daily is zero to none. However, the concept of compounding is 100 percent accurate.

~ Damon Carr

Coach, what are your strategies for compounding your money?

~ Steve

 Damon says: Social media is a soundbite culture. As I come to understand this, I decided to turn many of my article titles into memes. “Compounding interest is your staircase to wealth” is one of my article titles. Google it. It’s a good read. 

Compounding interest is the accumulation of interest, earning interest, earning interest, earning interest, etc. It keeps going and going, thus growing and growing like the Energizer Bunny.

Albert Einstein, who coined the phrase “compounding interest,” was the 8th wonder of the world, a renowned genius. Even he was confused by the exponential growth potential of money once it started compounding.

I don’t ascribe to “get rich quick schemes.”  Building wealth is a long game. Investing money and allowing it to compound over an extended period of time is how everyday, ordinary people amass extraordinary wealth. Key point being, doing it this way takes time—YEARS!

There’s no magic pill or best kept secret to building wealth and more importantly sustaining wealth. People tend to go broke seeking and employing the so-called magic pill, best kept secret, latest trend, or fad promising riches, wealth, and an abundant life. If you want to become rich or wealthy FAST, there’s primarily two ways to do it: Become so great at what you do, people will pay you an insane amount of money to watch you do it or have you teach them how to do it. Develop a product or service that everyone wants and people will travel far and wide to purchase it. Let’s say you’re great at what you do or you’ve created a great product that fulfills a need. You still have to convince people that you or your product is the best.  Easier said than done!

Simply put, you have a better chance of becoming wealthy with compounding interest than you do convincing the world to pay you handsomely for your great skill, talent, products or services. I suggest that you try both.

My strategies for compounding my money are simple. Invest money over an extended period of time with a reasonable expectation. How do I invest with confidence of having a favorable outcome regardless of market fluctuations? I employ these sound investment strategies:

  • Have a definitive investment objective and goal
  • Understand underlying investment track record
  • Ensure my asset allocation mirrors my risk tolerance
  • Invest periodically by dollar cost averaging
  • Seek investments with a low expense ratio
  • Maintain a diversified portfolio
  • Seek investments with a low turnover ratio
  • Rebalance my asset allocation every six months

(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website at


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