Most consumers find it extremely difficult to get an upper-hand on their finances. In modern times, we are constantly bombarded with advertisements that encourage negligent spending. Many are tempted by such advertisements and find themselves in a financial mess later down the line.
While specific types of debt are appropriate (for instance home mortgages or car leases), others are not. It is becoming increasingly difficult (at least for most consumers) to differentiate between appropriate and non-appropriate debt. This is largely the result of unscrupulous activities carried out by banks and other businesses.
Credit cards are very accessible to consumers yet are a headache to maintain. It’s not uncommon to hear that card holders are using one card to pay off another. Credit cards seem lucrative as they are typically advertised as free. This is not the case. Losses in excess of $1,300 a year have been reported due to installment debts alone. Such fees can have a substantial impact on families that are living from paycheck to paycheck.
Bankruptcy filings in the United States have doubled in the past 10 or so years. Most filers fell victim to bankruptcy because they had an unexpected expense come up, one that could not be addressed without the use of a credit card.
Economists speculate that a global recession is well in the making. In Britain alone, card holders have accumulated some 130B euros in debt.
Borrowing money from credit cards is well on the rise. Borrowing activity has doubled in the last four years.
If you’re currently in debt, the time to remerge is now! Stop making only minimum payments. If you owe $1,300 and are only paying your minimum balance (~3%/month), it could take you 13 years to repay your balance in full. You would also be faced with an enormous interest payment – $1,106.00 (with an 18.9% per annum interest rate). However, if you double your monthly payment, you can rid yourself of the debt within 5 years an pay only $381 dollars in interest.
Those struggling to pay their mortgage should consider switching it. By obtaining a fixed-rate mortgage for the coming 2-3 years, a homeowner can rest assured knowing what his/her repayments will be.
There are some common signs one can use to determine whether financial difficulties are on there way. If you are experiencing any of the below, it may be time to adjust your spending habits. If more than one of the below apply to you, you may already be in financial turmoil.
•Using a credit card to fund purchases typically made with cash.
•Taking out loans to cover existing debts.
•Paying only your minimum balance on credit cards.
•Receiving overdue notifications
•Draining savings to cover household bills
•Cashing/Borrowing money from life insurance policies
•Working overtime to sustain your lifestyle
•Using your overdraft to pay bills
•Prioritizing debts
•Obtaining credit cash advances for daily expenses
When you’re free and clear of debt, it’s time to starting thinking about saving. Don’t spend money recklessly and on things you don’t need. A major computer upgrade or a new DVD player can wait. Getting your financial life reorganized is most important. If you’re diligent in monitoring your expenditures, you should emerge from debt better off.
29 Jan
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