Debt is becoming a growing problem in America. It is hard to imagine how some individuals become so far indebt. One of the most common reasons why debt occurs is because so many individuals are uneducated on debt and how it works. Education is something that should occur in high schools and colleges across the country, but debt education does not occur as often as it should. Below are some helpful debt facts that should have been taught at most schools, but are often not even discussed.
#1 – Debt Occurs to All Different Types of People
Many individuals think that debt only happens to those who are irresponsible or poor; however, that is far from the truth. Unexpected events and bad choices can lead a middle class or even a wealthy individual into debt. Debt does not discriminate.
#2 – Bankruptcy is the Not Only Way out of Debt
When many individuals get into debt that they feel they are unable to get out of many make the decision to file for bankruptcy. Bankruptcy laws have changed and it is not as easy to file for it. Bankruptcy may be a good choice for some individuals, but still does not completely solve the problem and there are often long term credit affects. Payment arrangements with creditors or the use debt consolidators are alternatives to bankruptcy.
#3 – No Credit is Not the End of the World
The saying no credit is just as bad as bad credit is a myth that many individuals fall victim to. Credit cards and loans are a great way to prove on time payments, but they can also backfire if payments are not made. It is possible to purchase a home, vehicle, or obtain a personal loan without having credit cards. Many financial institutions can use medical bills and utility receipts to verify your ability to pay on time.
#4 – Minimum Payments are Not Enough to Get You Out of Debt
When it comes to credit cards many individuals live under the assumption that as long as they make the minimum payment due they will be okay. That couldn’t be farther from the truth. Minimum payments increase the amount of time that it will take for the debt to be paid off and if a payment is missed that minimum amount could skyrocket to one that cannot be paid.
#5 – Cash Advances on Credit Cards are Financial Traps
When in need of quick cash it is not uncommon for a credit card holder to obtain a cash advance on their credit card. What many credit card holders do not know is all of the fees that are associated with doing so. In some cases the repayment of that money can double making cash advantages a financial trap.
The above mentioned debt tips are what should be taught in schools. Debt does not just include credit cards, but home loans, vehicle loans, personal loans, unpaid medical bills, and so much more. High school and college student need to be educated on these and other important debt facts or else they may be looking at a lifetime in the red.