Debt Solutions

Just started your first job?  Just received your first pay check?  With a pay slip, you qualify to be thousands of dollars in credit card debt.  You can buy things, which you cannot afford and pay for them in monthly installments, you also can get your dream car and take up to seven years to pay off the loan.  Like it or not, an approval to get into debt is a dangerous thing. 

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

A sure-fire way to get into debt is to live beyond your means.  Of course, you can enjoy your earnings after struggling for years in college, but you need to be clear about your financial situation and realize that every dollar you spend is your hard-earned money.  You can't earn $2,000 a month and spend $2,100; that's reckless. 

With a credit card, it is possible, but it will eventually catch up with you.  When your earning power is not increasing but you increase your spending, you will never have any solution for your debts. 

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

A credit card is a useful tool for managing money, not for borrowing money.  At an interest rate of as high as 18% per annum, it's one of the most expensive ways to borrow money.  A credit card shouldn't be treated as a form of loan as the loan amount will double in four years because of the interest, if you just make the minimum payments.  If you are pouring your hard-earned money into paying interest to the bank, you cannot save for your own goals. 

A good solution for youngsters, in order to avoid them getting deeper into debt is to ensure that they pay their credit card bills on time, make the full payment every month and do not make major purchases if they don't have the money to pay for them. 

It's not good for someone who is new to managing money to have a credit card.  However, if you do own a credit card, it's good to use it for fixed expenses like utility bills and insurance premiums, on the other hand, for the variable expenses, use cash.  

Sometimes, you just have to get into a debt.  For instance, a car loan, especially when you need a car to get to your workplace.  However, it's advisable that you get a small and affordable car to start with.  If you are in the sales line, a car is a must.  The car should not be a status symbol but a tool to help you progress further in your career by improving your efficiency and allowing you to work longer hours. 

In conclusion, the best way of managing money is, when you taking on necessary debts, make sure that your total borrowings do not exceed one third of your income.