How to Avoid Debt Traps Of the Frustrating Kind
Debts are a problem and it is the best-kept secret in the world. For some decades now, we have become increasingly comfortable using credit and avoiding making payments until a later date. The subprime mortgage market ensured a global financial crisis and perhaps managed to wake some of us to give us the realization of the kind of trouble we were in.
However, even now we are prepared to become trapped into debts of the frustrating kind that can derail our plans and prevent us from accomplishing our goals. Given below is a list of some of the most dangerous debt traps and methods of how to avoid debt traps of the frustrating kind.
Credit card rewards are debt traps that should be avoided
It is indeed true that rewards from credit cards are a powerful way of earning cash back points and trips among other offers that are also being made. However, a large number of people who sign up for such cards end up accumulating debts.
They are enthusiastic about making purchases by using the credit card without realizing they are also accumulating bills which have to be paid and getting into a debt trap without intending to do so. People are advised to be realistic when considering an application for a rewards credit card. People who are uncertain about their usage must decide against applying for the card and avoid the debt trap altogether.
Brand-new cars are a debt trap
When watching commercials on TV every salesman for a car seems to think you deserve a brand-new car. They make a number of claims telling you how easy it is to own a brand-new car because you are only required to make 36 monthly payments of $500 each. They never tell you the interest you will have to pay on the financing for the car and just concentrate on the principal amount you are required to pay. Rather than get into a debt trap of this type you should be considering a used vehicle that will serve your needs. They will cost a great deal less and give you an opportunity to save money for your retirement or to purchase a house.
The student loan debt trap
Over the last three decades, the number of students taking loans for college has seen a significant increase. It is true that college education has become unaffordable and individuals who are pursuing a course will need to obtain student loans when attempting to get a degree.
They are perhaps encouraged by their parents and their teachers with the words that student loans are part of the college experience. Unfortunately, students only realize that they have walked into a debt trap after they obtain their degree. Students who are considering this option must be conducting plenty of research on the alternatives that may be available to student loans and make an informed decision because it will help them to avoid a debt trap which they would rather not want.
The look good debt trap
Looking good is a choice everyone has but it, however, requires plenty of money for clothing and other accessories that may be desired. Using the latest trends becomes a necessity when trying to look good and therefore people do not hesitate to use their credit cards and willingly walk into a debt trap without realizing the consequences.
In order to avoid getting trapped into debt, people are advised to create a budget that includes a specific amount of clothing and other accessories. They should make an attempt to stay away from malls and department stores when they have reached the limit they have set for themselves. It will be helpful for them to avoid falling into a debt trap that would frustrate the life out of them.
Debt traps are always frustrating simply because it takes a significant amount of time to get out of this problem. Rather than get into traps like these people should be learning about how to avoid debt traps of the frustrating kind.
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