Debt is a necessary evil for most of us. Whether you have a mortgage, a car loan or are paying off a credit option on a new gadget, nearly all households across North America have some sort of debt. The issue to address with debt, is how to limit it.
The buy now, pay later options that are found in furniture stores, electrical stores and the like, are an excellent way to get what you need now, even if you don't have the money. The issue with offers such as these, is that once the term has passed which you have agreed to and "later" is actually now, you are going to owe whatever the original price was, plus the interest that you agreed to at the time of the initial purchase. The most effective way of getting the best from these particular types of offers, is to save, each month, a fraction of whatever the overall cost of the item, totaling at the end of the term, the original price amount. For example, if a TV costs $1,200 and is bought on a buy now, pay in twelve months option, the buyer saves $100 per month, ready to pay off the overall cost of the TV at the end of the twelve month term, doing so, before it incurs interest. Interest on these types of offers is known to be extortionate and quickly mounts on the vulnerable consumer.
Credit Cards are a necessity for most of us in everyday life. Whether we are shopping online, paying over the phone or by some other format, it's necessary to have a credit card. Credit cards aren't the root of all evil if used with a couple of simple rules kept in mind, but when used with little consideration, they can cause huge financial issues. If at all possible, don't use them if you can't afford to pay them off by the next billing date. Credit cards, when used properly are paid off in full each month, but that's often only possible in an ideal world. If you find yourself with mounting credit card debt, an effective way of dealing with it, is to transfer the balance on to a card that allows the user to have 0% interest on balance transfers. These cards are out there, advertised in the national press and may be available from your own banking institutions; a little research should uncover some good deals.
Store cards are another way to find yourself in debt that you didn't see coming up. A good rule of thumb is to remember that while you may be saving 25% or so on opening a card on the day you make a reasonably sized purchase, you may also end up paying the equivalent of that on the other end, with interest. If you are certain you will pay your balance off quickly, then store cards are an excellent way to save or earn loyalty points. Without this knowledge, it may be a decision to consider carefully
Keeping on top of correspondence from companies that have given you credit, by filing, reading and responding to what you are sent, are other ways to keep on top of and limit your debt. Debt does not need to be something to be worried about, if it's limited, controlled and managed. Debt could even just be a necessity, with no evil included.
by: Gen Wright
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