Debt, loan defaults, and foreclosures have taken their toll on the American Dream. More people than ever are finding themselves in untenable financial situations because of years of debt. Medical bills, student loans, credit card balances, mortgages—they add up. But unlike being thrown into a jail in Texas, long term debt can't be fixed by bail bonds Houston. You need practical advise, and a practical game plan:
Reduce your spending | Live within your means
If you want to remain debt-free, you can't live at the edge of your income and wait for your winning lottery ticket. Start saving your paychecks instead of spending them. Ever heard the phrase 'saving money is earning money?' There's truth to the value of being frugal. Profligate spending has sent many people into bankruptcy simply because they weren't aware of their financial situation.
Find lower interest rates on your cards and loans | Find higher rates on savings accounts
Do you even know your interest rates? Hopefully, the answer is 'yes.' You should be continually looking for low interest rates on credit card balances and student loans. Conversely, try to invest your money into savings accounts with high interest rates. If you can afford to invest a minimum of $5,000, many banks and credit unions will let you open a high yield savings account.
Invest in the stock market safely | Consider mutual funds or bonds
Don't view the stock market as a lottery. Earning money by investing takes years of patience, research, and diligence. You may be better off investing in a mutual fund that covers a number of different companies. Or a government bond that will grow with interest or compound quarterly.
Avoid home loans you know you can't pay off | Don't live on the edge
The housing market—and by proxy the American economy—collapsed largely because of unsafe lending and borrowing practices by banks and prospective homeowners. Learn from history; only take on a home loan that you know you will be able to pay off within a reasonable number of years. Unpaid mortgages are a massive culprit in American debt.
Don't put unaffordable expenses on a credit card | Pay as you go
Credit card debt is another culprit, especially among Generation Y, which seems to view bankcards as its own personal bailout. Having a credit line isn't an excuse to spend money you don't have. Pay for things with the money in your checking account, or don't purchase them at all.
Debt becomes a nightmare for many people. It can destroy relationships and damage families. Learning to manage your debt now will allow you to prevent worse debt in the future. Remaining debt-free is the way to be.