As i was browsing the internet this morning, my eyes caught the attention of a personal finance title with the heading “The 5 Dumbest Things You Can Do if You Have too Much Debt”, and clicked to read the article. I thought that the article highlighted some very important points that anyone who is getting out of debt, or trying to stay debt free, should always keep in mind.
The five strategies you may want to avoid:
The first piece of advice from experts in the financial field is to be sure you don’t make your situation worse by making common mistakes. In particular, try to avoid:
- Paying only the minimum payment on your debt, as this will result in the amount you owe actually growing, and your problems will only become worse.
- Relying on friends and family, as this can damage relationships with the most important people in your life.
- Unscrupulous credit counselors that demand cash upfront or high fees for help they promise, but don’t deliver.
- Using new, high-interest loans to pay off lower interest rate loans. While it may be easier to just have one payment, it will actually increase the amount you have to pay back.
- Declaring bankruptcy–this can have permanent and severe consequences on your financial future. Avoid it if you can, especially when debt settlement may work for you.
While there are some exceptions, for most part avoiding these five things/ strategies, you will be better off in the long run than if you take the pill.
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