The equivalent of falling off a tall and steep mountain can be compared to getting into a debt these days. The initial stumbling block would be the availability of credit, which has the potential to quickly grow out of proportion and turn into an avalanche. You might not even realize the slide you are taking before it becomes too late to stop.
There are times though, when we see the debt becoming a part of our life, when we plan for it like buying a house or a car. There are circumstances like losing a job or a sudden unforeseen medical expenditure, which could give your finances a sudden blow. Even though such things cannot be predicted, it would be advisable to prepare for it. In United States the mean debt of families, is a few thousand dollars and if you don't want to be part of this statistic, you would need to spend in a smart manner and you would need to start right away.
Life has become quite cut throat and complex and you will not be able to maintain your edge if you are aging. There are individuals who are not aware of the pitfalls of their behavior and may fall into a debt trap through bad decisions. Here is a list of common spending signs, which you would need to stay away from.
1. Unaware of the total debt. You would need to get the big picture by adding all the payables. The extent of the problem needs to be ascertained and this will help you take decisions about money, which are obvious and elementary.
2. Credit cannot be counted as income. You will only worsen your debt as your credit card bills mount. You will find that managing debt is not as hard as it seems, if you learn not to spend more than your monthly income. If you can control, it is really very good.
3. Charging with a loaded credit card is an option to be avoided. Before you start using it, bring down the credit card debt down to zero. It would otherwise be similar to digging your own grave. In order to completely paying off your bills, you would need to have a sensible strategy. Certain companies reward people who pay early, so try doing it at the earliest. This will help you get out of debt faster and you will be left with extra money too.
4. Minimum monthly credit card payments only prolong the time spent in debt and it will not help in reducing the principal. You will end up having an indefinite debt, if you fall into this trap. The minimum payment has been increased by lawmakers, which will discourage such payments and ensure that the loans are paid on time.
5. If you have a tardy payment plan and do not pay on time, it will only result in you paying additional fees, which could be as high as $40 per delay. The minimum will also increase due to this as the finance charges to your original debt increases due to default. You can seek assistance from a financial expert, if you are having trouble budgeting your income.
6. If you had not saved anything and are faced with an emergency illness, such as an unforeseen illness or the car breaks down, you might have no other option but to use the credit card. Your expenditure will be further magnified. Remember to set something aside for rainy days and cash is definitely a smart option.
You must stop taking funds out of your retirement as your earning potential will go down as you age. What will you use when you are forcibly retired and you had not saved anything?
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