>>> Posted by Admin - 01/01/2016 - 0 Comments
When finances run into trouble with overflowing debt or emergency expenses it often catches a budget by surprise. They also offer a cost effective approach to problem solving. That's right! If you can pay the loan back on the original due date, the fees are often smaller fees than those lurking in the corners for when you don't get money in the bank: bank overdraft and/or bounced check charges, merchant's NSF fees, debt late or missed payment charges. Multiple charges from one financial infraction are much more expensive than a short-term loan interest charge (for average sized loans).
Credit debt will often create more havoc in a person's finances over the long-term. This debt is tied to a credit score which makes it more of a problem. If you let debt get too high, miss a due date or the payment altogether you are already on your way towards a debt trap. Because these accounts are revolving credit ones, any payment made towards the debt opens up opportunities to spend more. It is very hard to get out of any kind of debt when your budget relies on third party money to make all monthly payments. You are trapped in a reliance of third party money help.
It doesn't really matter if the debt belongs to a short-term payday loan lender or a credit card company. If you are trying to get the debt paid off but need to borrow more to make other matters work at the same time, then you are in your own debt trap. It isn't necessarily the interest rate or how long the terms are. Your income needs to afford your monthly expenses plus have some left over to take care of unexpected costs. This is money management at its best.
If you find yourself trapped in debt, it may take cutbacks or possible cut outs in order to get the debt paid down to where it can be managed along with other expenses. Take an opportunity to look more closely at what it was that started mess to begin with. Blaming the lender and creditor for your financial problems may make you feel good, but if the budget was balanced in the first place, the debt trap may have been started by something a bit closer to home.