- Do you feel like you only have $20 left until your next payday when you pay bills?
- Do you “just make it work”,…or swipe credit cards everywhere you go?
Many of us face this predicament at some point. And our choices at that moment can have severe consequences on our financial future. So, how do you manage the pitfalls associated with debt and come away unscathed?
Today’s economy and housing crisis are not helping. Living costs are more expensive than ever, and people struggle to make ends meet. How do they make up the deficit? Credit cards and loans.
There’s no doubt that credit cards and loans are suitable for establishing credit, but when you use loaned money as income, you can create a future financial disaster.
Watch out for these four financial pitfalls:
1. The temptation to overspend
Cash is an absolute – what you have in your wallet is what you can spend. Digital money like credit cards and loans are intangible, making purchasing easier, as you think, “There is room on the card” or “They approved me up to $10,000.” The decision to buy isn’t affected by what you have in your pocket but the limit on your card. You must ask yourself whether you need it now or can wait.
2. Interest accrual
Where do we even start with interest? The premise is simple – fail to pay your card off in full every month, and you’ll begin accruing interest. And credit card interest rates can be up to 26%! You can pay two or three times the item’s purchase price if you don’t pay your credit cards in full monthly. The sale price savings you receive or the “no interest for a year” don’t add up if you’re not paying off the total balance. Always pay your balance at the end of the month or as quickly as possible.
And, if you are thinking of buying something on your credit card, make sure you set a deadline for payment to avoid paying extra interest.
3. Lack of savings
The more reliant you become on credit cards the further away from saving you move. If you are not saving up for big purchases, you’re likely not saving up for a rainy day or emergency funds. What would happen if your car broke down? Who would you borrow money from? Your car insurance company in Perth won’t cover it. Creating a savings account is a crucial first step on the road to financial security.
4. Being overwhelmed by debt
Debt can make you feel anxious and overwhelmed, especially if you don’t have support from friends, family, or creditors. Dealing with debt all alone can be a considerable burden.
Worrying about debt can:
- Affect your sleep.
- Affect your ability to work.
- Affect your relationships with friends and family.
- Make you feel insecure.
Ask yourself these questions to find out if you have a debt problem.
- Does thinking about managing repayments make you anxious?
- Are you struggling to make or routinely miss minimum utility bills, credit cards, or rent payments?
- Do you receive or ignore letters from creditors?
- Do you avoid calls from unknown numbers on the off chance it is a creditor calling?
If you answered ‘yes’ to any of these questions, you may want to get help. How would you handle an emergency if you can make minimum payments, but all your credit cards are maxed out? Once you cannot make even the minimum payments, your creditors will flag your accounts, and late fees might accumulate.
Once this happens, it’s hard to pay the debt off. If you are already in this spot, contact someone for financial counselling. A lot of credit unions offer free financial counselling to their members. They are often willing to help you get on the road to financial well-being – you might just need to ask.
You won’t achieve your financial goals by depending on credit cards, buy-now-pay-later schemes and pay-day loans. Instead, you need to create an achievable plan to help you through. Understanding the above pitfalls can help you adjust and take control of your finances.
Why opt for a debt consolidation loan?
- Simplifies how you manage your finances.
- Saves some people money by lowering their interest rates.
- Makes life easier when you have fewer monthly payments.
Many people still wait until their debt reaches a critical stage before they act on it. Acting now can you help control your debts and possibly have a better future.
Let Yes Loans provide expert advice on whether you should get a debt consolidation loan for your needs. You don’t have to commit to anything when contacting us; there is no obligation.
Choose Yes Loans in Perth
With our customer-centric approach and commitment to providing reliable financial support, Yes Loans on Perth offers a compelling reason for you to choose us. Our streamlined application process ensures you can apply for a loan quickly and easily without the hassle of lengthy paperwork or unnecessary delays.
Whether you need a personal loan, a car loan, or a small business loan, Yes Loans has you covered. Our loans offer a range of options and loan protection insurance. Once you have a budget, contact one of our loan experts or apply directly for fast, efficient pre-approval to finance your dream long-term loan. Let one of our fast online loans in Perth help you achieve your financial goals.
Start by finding out how much you can borrow with our handy online Loan Calculator.