Debt Management Tip #1: You Can Live Without It!
Contributed by Caryn e Zent
Debt Management Tip: Don't Try Keeping Up With The Neighbors
We are inundated in the media with debt management tips. Why? We are in debt! Our society has a problem with a bigger-and-more-expensive-is-better mentality. And due to the availability of credit, it is not only the affluent who can purchase high-end luxury items. What does this create? Debt! Credit provides a fantasy world of wealth, and retailers build on this by telling us we must have the best of everything.
Debt Management Tip: Do you REALLY need that??
$800 sheets. $7500 watches. $200 jeans. $125 cookware. $6000 pashmina bathrobe. Huh? Does the $125 omelet pan cook your eggs better? Does the $7500 Rolex really keep better time? If you are pulling down millions per movie, then you can actually afford the ultimate luxuries without selling your first born. Your budget is already stretched, yet you just have to have the best. But at what cost? Here's a great debt management tip: ask yourself with each purchase if you need that item right now at that cost.
Debt Management Tip: It Costs More Than You Think!
If you are using all of your credit and therefore spending all of your funds on the appearance of affluence, which means your debt level is rising, then your are missing the chance to actually build your own wealth. You are not investing in your future by purchasing high-end items you cannot afford. In terms of the actual cost of credit, a $1000 balance can take 12 years to pay off when making the minimum payment each month. The interest ends up being over $980.
A scary statistic: according to msn.com, nearly 94,000 people under 25 filed for bankruptcy last year. A couple of morals to that story: adding $25 to your minimum payment can shave the payoff time by years, and not spending what we don't have...well, you get the picture. The debt management industry is huge right now, and we can see why.
