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The Golden Rules Of Debt

Updated on July 17, 2008

Be Wary of Borrowing More Money

The idea of borrowing money has become too lose in practice; it is tempting to pay with a credit card, but the card holder isn’t really paying for the purchase. In actuality, he is borrowing money. He may also be borrowing it at a very high interest rate. None-the-less, he is paying some interest and in a sense that money is just wasted for the sake of convenience or instant satisfaction. Other ways of borrowing money are getting personal loans, store cards, and mortgages. Also interest-free, bank overdraft, and no-repayment-terms are different names for borrowing money. So the consumer ends up paying interest, charges, and fees instead of just paying for the product and paying taxes.

If the consumer decides to borrow more money he should consider these factors: Examine the types of interest like variable interest, ongoing interest, fixed interest, and interest-free days. It’s important to know what they mean and how this will affect the transaction. The consumer can save money by saving up and paying for his purchase with cash. He may also get a lower price for cash as some merchants offer this benefit.

It is best to stay away from borrowing money from payday loan businesses. They usually charge high interest rates and the term is very short for borrowing less money.

Don't Ignore the Problem

If the consumer does get in over his head with debt from borrowing and then not being able to keep up with the payments he does have some options. Ignoring the problem only lets it get worse.

Maximize Your Income

Another answer is for the individual to maximize his income. Some suggestions for maximizing income are to get a second job and to budget the income he has. Budgeting involves listing all of his expenses that are vital like food, shelter, and utilities first and then adding his other expenses and that means everything. Then see how to cut down on spending. To help himself with budgeting he can use the debt to income ratio. It can be found on the internet.

Speak to a Free Advice Service

He can get advice and help from a nonprofit counseling agency. There are many of them and some are government sponsored. He has the choice of getting advice from a forum designed for helping people in debt. These forms of help can be found by researching the internet for “nonprofit counseling agencies.” The debtor can find good advice about finding a good nonprofit credit counselor at the Federal Trade Commission website. If he needs bankruptcy counseling he can go to the US Trustee Program website. There’s a list of counselors for each state that are government approved. He will need to see one of them before going into bankruptcy because of a law enacted in 2005.

A lot of useful information can be found online using search engines. Just type in some of the following keyword phrases e.g. debt resources, bankruptcy options, credit resources, legal resources, financial resources and other information.

If a person is in trouble with his debt he should quickly speak to someone that can provide credit card debt management and develop better financial habits if that was the origin of his problems.


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      MARPAT 9 years ago

      Yet people still go to those payday lenders. Guess they don't teach the rule of compounding interest in school anymore. Sad......