Debt is rising for the U.S. government at an alarming rate, but for the citizens of our country average debt is slowly being eliminated as reported in CNN. Back in 2008 the average per person debt was about 8 thousand, fast forward to 2011 and the average debt is unknown as some reports claim that the debt is between 6-9 thousand and others claim between 10-15 thousand dollars. In my opinon I believe that the first figure is broken down by the total house holds who have debt and those without debt in America. The second larger figure is broken down by the households that only hold debt. So why report false hope in the eyes of the average person reading the article, because the credit card industry’s main purpose is for us to keep spending and continue fueling their revenue stream.
If the average person feels that the economy is doing better overall then they will go to the mall and shop thus fueling all aspects of our economy. But why set up a system to indebt the average person for years at the sake of our government’s GDP and corporate greed. I will provide a few tips to knock down debt and release all of us from the curse of the plastic gods.
Tips:
1. Always pay more than the minimum even if its 20 dollars more per month.
2. Begin to live a cash and debit card system, leave the credit cards at home. (emergenices only)
3. Call the companies you owe and negotiate a reduced rate on your cards.
4. If you have a car loan refinance it. (Lower rate and decreased time frame)
5. Use any additional income and tax return to pay off loans. (70% of tax return for debt reduction)
6. Use Balance Transfers only if they come with No transfer FEE option. (Chase has this often)
7. Read Dave Ramsey’s Books for the proper way to roll away debt. (Debt Snowball)
8. Debt: 1.Schools loan(Pay minimum), 2. Car Loan,(Pay minimum) 3. CC Debt (Pay maximum)
Now you can see what you need to do to get rid of debt in your household. After getting rid of the CC debt, begin paying the maximum to car loans until that is paid off. The secret is to not add on new debt while paying down debt or the downward cycle will never end for you. I have put togeather a poem for your reading pleasure:
Awesome poem!
Quick question :: If we stick to the cash and debit system, how can we build our credit? All home and auto loans are given based on a good credit score, is there any way to work around that?
@Real- Thanks for the comment. If you stick to a cash system you are 100% correct that your credit history will get dinged with a reduced score and eventually you will have no credit history. If you percieve that you will be in the market to buy a home or car then keep one or two credit cards open and charge small amounts every month like your cell phone bill and pay it off completely at the end of the month. This will ensure you will have a good payment history and score. If you are already a homeowner and do not percieve getting any loans in the future, then the only reason you will ever use credit cards, if they are paid off, would be for emergencies and to get cash back/airline rewards/points. Further more if you have a 6 month emergency fund then you will not run into any issue with using the cards for emergencies. Hope this clarifies things for you. Also every tip mentioned in this post I have successfully implemented in the past.
Hey Uncle El,Cool rap/poem about debt, you need to go to high schools and colleges and start teaching this information because that's when most people are sucked into the debt world. We have been doing the Dave Ramsey but the hardest thing is keeping money in savings when you use just cash. Can you give me some ideas of how we can do this?Your sis,Ing
@ING- Thanks for the comment, The first way you can save some cash is to pay yourself first every paycheck and then live off the rest. A simple ING direct online account can be set up for you with an automatic transfer option, the funds will leave your checking account every pay day. Having an online barrier will help you avoid temptations to take out the money. A good percentage breakdown for you to save for your goals would be to sock away 5% – 10% of your pay off the bat. Another Idea is to live more frugally, like having a veggie night twice a week(no Meat) or in the weekends avoiding all Malls/Retail Stores. Simple fixes to your lifestyle should pay you back with a great savings account if done right. Hope this helps you.
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