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Tag Archives: credit card debt

Prioritizing Debt: What to Pay Off First

Paying down debt can be intimidating. Even after you’ve decided to focus on reducing debt, knowing where to start can be tricky. For consumers, understanding which debts to pay first can mean thousands of dollars in savings. Not all debts are created equal — some can hurt your credit score, and others may have higher interest rates. Here are some factors to consider when deciding which debts to pay down first. Know your interest rates Interest rates vary widely. According to NerdWallet, a personal finance website, the average interest rate for credit card purchases is 18%, while Experian has found that the average interest rate for a new auto loan is only 4.76%. In many cases, the right move would be to focus on paying down credit card debt. However, look carefully at your interest rates to determine which of your accounts is most costly. If you have high-interest credit card debt, you can save money by transferring your balance. Credit card companies offer balance transfer credit cards that allow you to move high-interest credit card debt to the new credit card with a 0% introductory interest rate. Fees for this transfer typically range from 0% to 3% of the ...

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Being at Peace With Debt

paying off debt without stress

With of Americans carrying almost 12 trillion dollars of debt, it seems inevitable that we’ll all owe someone money at some point. I was reading an article about student loans recently and it listed a concept that many in the personal finance community don’t understand or support; coming to peace with debt. At first glance, I was ready to write the whole article off as one of those advice pieces that are about as helpful as payday loans or 18 months with no interest until I read further and decided that maybe being at peace with debt isn’t such a bad idea after all. Debt Can Control Your Life It’s very easy to let debt control your life. One example is after overextending yourself to the point where minimum payments are forcing you to live paycheck to paycheck. In this situation, the end of the money happens before the end of the month. You’re forced to dig further into debt keep the household running. The other example is when you have a sizable debt, something like a mortgage or student loan, and you can’t get over the fact that you’ll owe money for years. Even though these are considered “good ...

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How I Got Into Debt

There was a time when I thought it was normal to be in debt. As I finished school and entered the work force, I believed it was normal to sign up for the debt club with a new mortgage, new car, and all the trappings of the lifestyle people told me I needed. Eventually, debt lost it’s glitter, and it took control of my life. I’m here to tell you how smart people get into debt by spending too much, believing in good debt, getting approved for too much credit, and thinking that making payments means you can afford it. Later this week, I’ll tell you how to stop the cycle because debt does not have to be forever. How I Got Into Debt People only get into debt one way, by spending more than they earn. My initiation into the debt club came on my first day of optometry school when I picked up my first ever student loan check to pay tuition. Since my income was zero and I’d just spent $10,000, I got immediate silver status! Fast forward four years, and I graduated with a really nice diploma, a residency position that paid $25,000 a year, and ...

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Can You Be Happy If You Have Credit Card Debt?

For anyone who has ever struggled with credit card debt, I’m sure you realize what a drain on your budget having to make monthly payments plus interest can cause. Since the average American household carries over $7000  in credit card debt, having those monthly payments is something many of us are familiar with. We all know that carrying too much credit card debt can wreak havoc on our credit scores, our ability to get good rates on home or auto loans, and could wipe us out if we are living paycheck to paycheck. My question today is about quality of life and if people can truly be happy when they have credit card debt. What Is Happiness? I think before we can answer that question, we have to define what makes us happy. Is it having new clothes? Is it standing in line to get the latest iPhone? Is it spending time with our family or going on a vacation? Think about the last few times you felt really happy. What were you doing that made you feel that way? Do Things Really Make You Happy? If your answer included something monetary like clothes or a new car, I would ...

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Even Granny Has a Credit Card

I was in line at the grocery store the other day. As usual, I was running behind schedule and tried to pick the shortest line with the most efficient looking cashier. The line I chose had a great cashier, but it all ground to a halt when the most dreaded sight to a rushed shopper appeared. Someone pulled out a checkbook. My first thought when that happens is why don’t you get a credit card? Even Granny has a credit card, right? Who Doesn’t Have a Credit Card? Honestly, who on earth doesn’t have a credit card? The only demographic I can think of really are elderly people. While it may seem like they are behind the times, maybe they are the smart ones when it comes to paying off debt. I honestly love to have older people come into my optometry practice. They generally pick out what they know works for them and write a check for the full balance, while I often see younger people having to jostle around different credit cards to find a combination that isn’t maxed out to pay off their bills. I found this article on Time’s website about how many young adults will ...

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