- Scarred by Debt
by Natalie Daly
Times are tough, but you don’t have to let your debt mark you forever. If you’re among the 79% of undergrads who have credit cards, you’re part of a group carrying record-high credit balances. The average balance grew to $3,173 and 21% have balances of between $3,000 to $7,000. And this isn’t even including the more than $25,000 amassed in student debt!1 Is this really the way you pictured starting your life?
Proud and in Debt
According to researchers at Ohio State University, young adults feel empowered by their credit card and education debts. Seriously?! You feel empowered? “The more credit card and college loan debt 18- to 27-year-olds had, the more they felt like they were in control of their lives. Ironically, this is the generation that is expected to deal with an increasingly growing 14 trillion dollar national debt.”2
Don’t let your debt scar you. Get out now and stay out of debt. That’s the only way to really get ahead and make the most of all of your hard-earned cash. Here are some tips to help you avoid digging yourself into debt:
- Add it up. It might make you a little queasy, but you’re better off knowing where you stand. Get all of your bills together and do the math.
- Less cards = more control. Did you know that half of college undergrads had 4 or more credit cards?3 It’s time to get rid of that card you opened for a free T-shirt on the first day of class and keep it manageable. Have you heard of debt stacking? It’s a great way to gear down your debt. Take a look:
- Check your credit. Did you know you can get your credit report for free once a year? Visit AnnualCreditReport.com (877-322-8228). You might have a “don’t ask, don’t tell” policy on your debt balance but your credit score is the number one thing banks, creditors — and future employers — look at, so you’d better know what’s up.
- Develop a budget. Ugh. The B-word. Budgets are boring, right? Maybe, but for some, this can be a major wake-up call. If you seem to run short at the end of the month and can’t figure out where the money goes, this is a great way to discover less than stellar trends in your spending habits.
- Learn from your mistakes. “Nearly one in five 18- to 24-year-olds is in ‘debt hardship,’”4 so even if you’re in over your head right now, you can make a couple of strategic changes and get back in the black. As soon as you learn from your mistakes, you can start taking a step in the right direction … and that’s money in that bank!
* The examples are for illustrative purposes only. The Debt Stacking concept assumes that: (1) you make consistent payments on all of your debts, (2) when you pay off the first debt in your plan, you add the payment you were making toward that debt to your existing payment on the next debt in your plan (therefore you make the same total monthly payment each month toward your debts) (3) you continue this process until you have eliminated all of the debts in your plan. In the example above, when the retail card is paid off, the $220 is applied to credit card 2, accelerating its payment to $573. After credit card 2 is paid off, the $573 is applied to the car loan for a total payment of $1,124. The process is then continued until all debts are paid off. Note that the total payment per month remains constant.
Tags: budget, credit, credit cards, debt, debt stacking, education, money, spending, student, undergrads
Posted in Primerica, Tips |
Did you know, the average household “owes 20 percent more than it makes each year?”1 With the current financial crisis, that percentage may even increase as families go deeper into debt just to maintain their lifestyles.
Primerica recognizes that education is the first step toward helping families learn to develop a healthier financial life. We believe a good understanding of how money works is key to long‑term success. These three tips can help you get started.
1. Avoid the revolving consumer debt trap.
Most credit card debt is revolving debt. Because of the way interest is calculated on revolving debt, it’s hard for you to know exactly how long it will take to pay off your balance. All that interest can add up to big bucks along the way!
With fixed debt, you make payments over a set span of time. It’s easy to tell when the principal will be paid off and – even with the same interest rate and monthly payments – the pay off date is usually much sooner than with revolving debt. Consolidating revolving debt into one fixed rate loan can potentially eliminate those debts sooner and reduce your monthly payment.
2. Understand compound interest.
With a revolving debt account, compound interest can eat away at your financial health. But when you use compound interest in your favor, it can really help savings grow. The more you save, the more interest you can potentially earn on that money.
3. Make a lifestyle change.
When it comes to reducing debt, little changes can make a big difference. By separating “wants” from “needs,” and making the “needs” the priority in spending, you can begin saving toward your future.
It’s a good idea to have periodic checkups with a financial services professional to make sure you stay on track for your goals. Primerica offers a FREE Financial Needs Analysis that is designed to highlight problem areas and present strategies to deal with them.
Tags: credit cards, finance, free, home mortgage, newsweek, Primerica, Tips
Posted in Primerica |
A recent survey shows the median amount of household credit card debt is $6,600 and the average debt load is almost $9,900. Further, of the 88 million credit card carrying households, 61% carry a balance from month to month.1
If you feel like you’re sinking under the weight of debt, looking into a debt or credit “help” firm may seem like a good idea. But some of these firms that promise to eliminate debt or repair credit may not be operating in compliance with the law, and doing business with them could have long term negative effects on your credit report and ability to get credit.
Here are six key “red flags” to look for when you’re researching a debt elimination or credit repair service.2
Red Flag #1: The company wants you to pay for credit repair services before any such services are actually provided.
Red Flag #2: You are not made aware of your rights and no information on what you can do to help yourself for free is provided.
Red Flag #3: The firm recommends you do not contact any of the three major credit reporting companies directly.
Red Flag #4: You’re told that the debt firm can get rid of most or all of the accurate negative information in your credit report.
Red Flag #5: The company suggests that you invent a “new” credit identity.
Red Flag #6: You are advised to dispute all the information contained in your credit report regardless of its accuracy or timeliness.
For more information about debt payoff scams, contact the Federal Trade Commission. To learn about Primerica’s debt solutions, visit www.Primerica.com.
Tags: credit cards, debt, debt consolidation, debt repair, Primerica, Primerica scam, repair services, scam
Posted in Primerica |
