12/21/2011 7:30 PM ET|
7 habits that keep you in debt
Sometimes things that seem like good ideas -- or harmless little indulgences -- can keep you from getting traction when you try to move ahead financially.
If mood-boosting shopping sprees and racking up credit card rewards are a part of your lifestyle, you could be fueling a dangerous debt addiction. Results of Card Hub's latest credit card debt study show that Americans accumulated $18.4 billion in credit card debt in the second quarter of 2011 alone. Credit card debt continues to be a major problem for the average American consumer, yet many are still living a lifestyle that supports a costly debt habit.
Here are seven bad habits that could be fueling your debt addiction:
Do you frequently borrow clothes, household items and even money from friends and family? If you always seem to be indebted to others in some way -- and fail to repay your debts regularly -- you could be addicted to debt. Find ways to make ends meet and stop relying on others to get by. The borrower mentality can leave you in a perpetual debt cycle.
2. Making impulsive purchases
Whether you're a Groupon junkie or just can't resist a sale, impulsive shopping habits could be fueling a debt addiction. Few people work with a budget for last-minute purchases, and if you don't have funds available, you're likely to use a credit card to get what you want. Curb those urges to shop deal sites and other last-minute offers.
3. Spending to boost your mood
If you indulge in retail therapy regularly, make sure you support the effort on a cash-only basis. If you rely on credit cards to get your shopping fix, it can be difficult to cover the costs of an emotional shopping spree without going into debt. Climbing out of debt will be that much more difficult if you've racked up huge balances to get your fix. Avoid shopping when emotions are running high.
4. Depending on cash-back credit cards
The concept of earning money for spending can be very seductive. If you tend to pay with credit just because you know you are "earning" a portion of it back in the form of cash or rewards points, you could be fueling a dangerous addiction to credit card spending. Cash-back credit cards typically pay you back a very small percentage of your charges -- think $1 for every $100 you charge. Unless you're very disciplined about paying off your entire balance by month's end, the money you earn back will barely cover the interest charges you acquired on that spending spree.
5. Routinely transferring balances
While it's smart to transfer high-interest balances to a low-interest credit card when you can, it's also easy to get caught in a game of "round robin" with your credit cards. When you find yourself paying off one credit card with another card, you could be setting yourself up for an endless debt loop. Pay off your balances, and stop using the cards to get off this dangerous cycle.
6. Living on interest-free financing plans
Zero-percent interest for the next 18 months and interest-free financing plans are great marketing strategies. Big-ticket items that can be financed with a no-interest offer seem like a great deal on the day of the purchase, but you could end up spending much more than you would have if you had paid with cash. The lure of "have it now, pay for it later" can be hard to resist -- and it will more than likely leave you with a pile of debt. Save your money for larger purchases so you don't end up carrying extra debt -- interest-free or not -- over the next couple of years.
7. Keeping up with the Joneses
If you're constantly comparing yourself with others and trying to outdo the neighbors with material goods, you could be fueling a debt addiction. One-upping friends and family by purchasing luxuries on credit can turn into a competitive sport -- a costly one. Avoid serious financial problems by living within your means and buying only things you can honestly afford. Trying to keep up with the Joneses can be the fast track to debt problems or even bankruptcy.
More from U.S. News & World Report:
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We will file or be dead by the time they come after the money. It is all unsecured. Our 40l k's are huge and will go to our kids. They cant touch that.
"Nothing creates poverty better than a monthly car payment."
They get themselves elected to our HOA and then prevent us from improving our property in ways which they could not afford themselves
As a sitting HOA president, I'll just add my 2 cents here. 1: its unlikely that it is the Board of Directors that is preventing you from improving your property in ways they themselves cannot afford. Likely it is your Codes, Covenents and Restrictions that you agreed to live by when you moved in that is preventing you from putting in that above ground pool.
2. As for the neighbor that complained about the trees, they can complain all they want but if the Association hasn't sent you a violation notice, then there is nothing to worry about. I cannot know the specific situation that your trees are in, but if they are close to the house they could appear to be over grown. We see this a lot with people who plant crape myrtles or thuja trees near the structure and never trim them back.
Finally, don't forget that as an association member (assuming you have paid your dues) you are welcome present your case to the Board of Directors and be heard for an appeal. You can also run to become a member of the BoD to change the rules with which you are required to live by.
I always tell my neighbors that I can't help you if you dont come to us (the BoD).
Hope this helps.
The Interest free is wrong. I use this all the time, but it's no big secret you must pay it off before the period ends. Example of one of these interest free deals is: 18 free interest months / into $498 is only $27.67 in monthly payments, so I pay 100 to 200 dollars the 1st month and pay the payments until paid off, or i just pay it off as quickly as possible. I also make sure I have enough to pay it off in savings too just in case.
I also use my cash back card and then pay it off that month. So far I gotten back $$$ for just using it and never paid one dollar in interest.
You are actually wrong. the 401(k)'s are safe from bankruptcy up to $1 million but when you pass on they become part of your estate which will be used to pay off any debts you owe before the money passes on to your heirs.
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