In this post, I’m going to explain how to beat debt and how to avoid debt in the first place. While it may seem that this is an easy topic to cover, I think everyone has heard of the financial crisis and how the government was able to take money from people’s accounts and use it for “other” purposes. That’s why I decided to write a post about beating debt and avoiding debt in general. This is a topic that affects all of us, as we take loans for our purchases or homes, pay for cars, houses, etc. It also affects our parents who have no choice but to borrow money when they need it for necessities like medical bills or college tuition.
While there are many ways we can avoid debt (such as paying off credit cards each month) or get rid of it as soon as possible (by refinancing or selling a home), I’m not going to focus on those options here (because most of the information you need can be found on those sites). Instead, I’m going to focus on how we can beat debt and thus avoid having a lot of it in the first place.
To do this effectively we must look at our finances in three different ways:
• Financial situation at a glance
• Financial situation after one year
• Financial situation after two years
I assume that you know what your financial situation is at any given moment. Many people will assume they know their financial situation well enough already, but if you don’t know exactly what your financial situation is right now you won’t be able to see any results from this exercise (unless you have some sort of finance software). This means you’ll find yourself constantly changing your mind about your current financial situation. For example, if it’s only been one week since payday then you might assume that now your finances are better than before (the bills are paid down), but if you’re making more than ever before then it might be time for another loan from your bank.
Let’s say that at the end of June last year my bank gave me a $500 charge for interest ($50 per day). My wife and I just had dinner with our son so we didn’t have anything outstanding yet (we have one car payment left). In addition, an unexpected expense came up (she had some wedding flowers delivered) which added another $200 in interest charges onto my balance ($50 per day). Let’s say that during July I
Pay off your debt with cash or a debit card:
I’ve written this article before, but it always gets me thinking. First of all, how can you beat debt? There are a lot of myths out there and they generally repeat themselves:
• “Debt is bad.”
• “Debt is bad for your credit score.”
• “Debt is a reflection of poor financial judgment.”
I’m sure you’ve heard these before and maybe even used them yourself at one time or another. As I read through the top ten responses from the comments section to my recent post on “How to beat debt, or not,” I noticed that many people said things like:
• “debt makes you pay more taxes… so go ahead and pay it off while you still can! Debt payments are tax deductible!”
If you don’t know what a tax deduction is, it’s this:
You may also be familiar with the term “expense”, which means something different than a deduction — but for most people having to make regular payments on their credit card debt is just another expense that has to be paid back sooner or later. Paying off your credit card debt doesn’t have to happen in one fell swoop; it could take months or even years if you take action now. Even so, if you’re not paying off your debt soon enough (or late enough), then sooner or later the IRS will take action against you. But paying off your debt early isn’t necessarily the best solution for long-term stability in your finances — especially if your income decreases as other expenses increase during that period of time because much of your income used to go towards making payments on that debt rather than spending on other things like food and shelter (which can also lower your net income). It’s possible that taking some temporary steps towards paying down debt might lead to more permanent improvements in payment history and future budgeting strategies (and perhaps even help improve your credit score). But taking action now could potentially save you money down the road by preventing further balances from accruing onto your credit card usage (something which will eventually eat up any benefits made from reducing those balances). While there are certainly people who say they will never use their credit cards again once they pay them off completely, there are some who have made good progress with their finances enough times where they feel comfortable with making absolutely zero payments on their debts for quite some time after paying them off completely
Make the minimum payments on other debts:
You have a credit card debt, and you want to make the minimum payments on it. What do you do? You could just pay it off in full every month, but then you will be paying $30 to 30-something each time you use your card.
The good news about this is that if you are paying off other debts with low interest rates (especially a student loan), those balances are likely to be paid in full.
In the meantime, if you can only afford two payments per month on your credit card debt, that gives you quite a bit of breathing room if something goes wrong with your credit score (or if you want to take the opportunity to move up to a higher-interest rate card). If something happens and your credit score falls below 500, then every extra payment may make all the difference.
If your income is low enough that paying $30 per month is more than you can afford each month, consider taking smaller payments instead. It may take a while before you get there, but don’t miss out on an opportunity for lower interest rates and improved cash flow. You might even save some money over time by doing this instead of your normal monthly payment plan.
You can use cash, a debit card or any other method to pay off your credit card debt. However, choosing the right method will affect the process of paying off your debt faster and more efficiently. The way you pay off your debt is also the way you go about clearing it.
The most efficient way of paying off your credit card debt is with a debit card. Debit cards are great for payments because they instantly deduct funds from your checking account when you make a purchase. They are also faster than cash transactions because they don’t require as much time to be approved by the bank and cleared through its payment system (they are processed instantly).
Another advantage of debit cards over checks is that they do not accept checks on their own; they require the signature of an authorized representative (such as a bank representative, escrow agent or an authorized person) who is authorized to sign for them in order to receive them in stores and online.
However, getting a debit card isn’t as easy as just calling up a few banks and choosing one you want. In this post I’ll show you how to find out if you can get one so that you can get it easily using one of many different options available today.