Debt Solutions

There is a growing statistic where youths have had their bank accounts frozen or have been declared bankrupts when they are just at the beginning of their financial lives.

An assured way of getting into debt is to live beyond your means. Of course, you can enjoy your earning after struggling for years in a college, but you need to be clear about your financial situation and realize that every dollar you spend is your hard earned money. It’s impossible to spend $2,100 when you earn only $2,000 a month.

With a credit card, it is possible, but it will eventually lead to a disaster in future. When your earning power is less than your purchasing power, you will never have any solution for your debts.

The most dangerous form of debt for a youth is the easiest one to obtain, which is a credit card debt. With credit cards, you can keep your cards as long as you want and make only the minimum monthly payments.

A credit card is a useful tool for managing money, not for borrowing money. With the highest monthly interest, it’s the most expensive way to borrow money. A credit card shouldn’t be treated as a form of loan as the amount will double in four years because of the interest, if you just making the minimum payment every month. If you keep pouring your hard earned money into paying interest to the bank, you cannot save for your own goals.

A good debt solution for youth in order to avoid from getting deeper into it is to ensure that you pay on time, make the full payment consistently every month and do not make major purchases if you don’t have money.

It’s not wise for someone who is new in managing money to have a credit card. However, if you do own a credit card, you can make use of it to pay for the fixed expenses like utility bills and insurance premiums, on the other hand, for the variable expenses, you should use cash.

Sometimes, you just need to get into a debt like a car loan, especially if you need a car to get to a workplace. However, it is wise if you get a small and affordable car to start with rather than a big, expensive one for a status symbol. The car supposedly to be a tool to help you progress further in your career by improving your efficiency and allowing you to work longer hours.

As a rule of thumb, when you taking on necessary debts, make sure that your total borrowings should not exceed one third of your income.