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You’re Not Alone When Seeking Debt Relief Advice
The average family carries a balance of between $5K and $8K on credit cards, with around $1K per family going to interest every year. In total, we spend over $1,000,000,000,000 (that’s one trillion dollars) every year on credit cards.
Over 90% of American family disposable income is spent repaying debts. If the trend continues, one family in a hundred will go bankrupt.
Billions of dollars are funneled to expenses that were created solely because of the credit card market. Administration, marketing, and other operations in the industry costs big bucks. Then there is the burden of dealing with bankruptcies by the court system, and the government cost of providing debt counseling. Consumers with more debt have less cash to spend, which hurts the economy. There are very few parts of society that aren’t impacted by debt.
It wasn’t very long ago that having any debt was frowned upon. Fifty years ago consumer debt was very low. If you wanted something, you saved money and bought it once you had the cash. Anyone with bad credit couldn’t get any kind of credit card.
Saving as a money strategy seems to be lost – almost no one has saved enough for retirement. We have an “instant gratification” culture, and we think that its okay to spend more than we can afford to fund our desired lifestyles.
But don’t assume the reason you’re in debt is that you haven’t spent your money wisely. Statistics indicate that it is rare that people get into deep debt from bad spending habits. Far more often, people end up buried in debt because they lose their job, get sick, or have some other serious turn of events in their lives. Credit cards get used to pay for staples to get through tough times, and before too long, debt spirals out of sight from just a few thousand dollars spent on essentials.
Most people have a good sense of what they can and can’t afford, and they don’t tend to use credit cards for things that they can’t pay for. The real problem is that they tend to leave their balances on the cards for too long, not realizing how much interest they are really being charged and how much they are adding to their overall debt by putting off the pay off.
Probably the best piece of debt relief advice any of us can take? Work on our Emergency Backup Fund … save a minimum of three (3) months; but aim for more if you can … (8) months worth of expenses (that isn’t “income”; it’s expenses).
Set up the budget, and start snowballing the credit card debt
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