Debt Begone! The Long Road to Financial Peace
From Visa, Mastercard, Discover, American Express, and etc. there are tons of different types of credit cards. The average consumer owns seven credit cards. Seven! That is amazing! Teens are excellent targets due to money needed for school and fancy cars, and for fianally living on their own. Where has our society gone? The average household is $38,000 in debt from credit cards. My husband has a credit card, and honestly I cannot tell you how we racked up money on it. Eating out every now and getting gas does add up! This can cause financial stress, and emotional problems between spouses.There is a way out though, it may take awhile, but there is a way.
First step is to cut up all of your credit cards! That’s right, everyone of them! “How will I order online, or make purchases on the phone without a credit card” you ask? Well, there are Visa debit cards. They can be used just like a credit card, and they even look like one! I know, because I have one. I am much more aware of my expenses when I go shopping because it is directly taken out of your account. Way different from borrowing and having to pay it back. No interest rates or anything. I order online on e-bay all of the time. I buy Christmas presents and everything. Paypal is another option available for payment online. This comes directly out of your bank account too.
If you have to borrow for when you have to buy a home, mortgage loans are the best to use when borrowing. Get a fixed-rate shorter-term loan. This way you can pay it off quickly, instead of accumulating interest over the years.
Auto loans are bad. Usually after awhile, the value of your car starts to detieorate before the price of the loan. This leaves you in tough position. The average car loan is about $375 a month. This is why you should first save, and then buy a car that may not be exactly up to your standards. I did this while I was in school, so it can be done! I saved $2800 and bought a 99′ Dodge Neon. I have no car payments, and that is the greatest thing every month. I highly suggest you try this. You can then save up money for a nicer car. You just have be patient and look around for a good deals.
If you are stuck with a high car payment and cannot pay it off then finance company will repossess it and sell it on a repo lot for a much lower price. You will have to pay the difference. Some cannot pay off a house from the difference, so one has to file for bankruptcy. Which is definitely not good.
Also, beware of low-rate credit cards, as most of them will become higher by the end of the year. never borrow money from a friend or from family. This can cause emotional tension in a relationship if one cannot pay them back. Never co-sign. you will be the one stuck with the bill if the other cannot pay for it. This happens a lot. You must be aware of all the credit card companys and loan sharks because you are the target!
One way to get out of debt is to keep yourself from becoming in debt and by the “snowball” effect by Dave Ramsey. This is where you set up a list of things that need to be paid (I’m sure it’s a lot!). You start by paying off the smallest things first, this way you get quicker results, and you can worry on the next thing that needs to be paid off. You just go down the list. This is an excellent solution! Try not to borrow money except for things that go up in value such as a house.