29 Aug 5 Myths About Debt
Debt is a nasty little side effect that comes from nasty little spending habits. If you have some chances are there are changes you need to make or have already started making in your spending.
On your search for ways to pay off your debt or just information about debt in general you’ve probably come across these myths. These myths are what people tell you, or you tell yourself, and they aren’t true.
Here are 5 myths about debt set straight.
Everyone Has Debt
Not true. It may feel like the whole world has a ton of debt they are hiding. There are some people out there that don’t have any debt at all. Yes, not even a home mortgage.
Don’t tell yourself debt is a necessity of life because it isn’t. A lot of people excuse their impulse shopping trips and maxing out credit cards with “Oh well, everybody’s got debt they have to pay off.” The truth is you can exist without it.
Debt doesn’t have to be your reality as there are ways to live your everyday life without accruing debt. If you already have debt the next step is to get rid of it as quickly as possible. If you have a car note put a little extra toward the bill every month to pay it off sooner. If you have a mortgage even putting $100 extra on your monthly note can take a 30-year loan down to a 24-year loan. That’s saving 6 years of payments and interest!
It’s Impossible To Pay Off
This is false. Sure, debt can be tough to get paid off. It isn’t impossible though. The key to paying off your debt is simple make a plan. Create a budget for yourself and your family and make sure you stick to it. Keeping to a budget is crucial when trying to pay off your debt. This way you know exactly where your money is going. This can help free up extra cash to put towards your debt and get it paid off that much sooner.
There are plenty of programs and methods out there you can use to keep track of your debt and help you towards your goal. It doesn’t matter how much debt you have. If you have any debt at all sticking to your budget and payment plan will help you pay it off quicker and with less stress. Paying off your debt takes time and effort but it is definitely achievable.
Paying The Minimum Every Month Is Okay
When you only pay the minimum on your debt every month you get rid of the creditors hassling you. However, you don’t get rid of the interest that builds. This interest is something that tacks on to your total debt at the end of every single month.
Your minimum payments will barely scratch the surface. Paying the minimum payment is fine if you only have the minimum amount to pay. Chances are you want to get your debt paid off. In this case you’ll need to step up your payments to help offset interest.
By doing this you’ll get your debt paid off years before you would have otherwise. When your debt is paid off you’re less likely to default on the loan or have to worry about making late payments. Your credit score will eventually rise due to a lower debt to income ratio.
You Can Inherit Loved Ones Debts
This is actually a legitimate fear that some people have. Luckily, it isn’t the case. Unless you were already named on the debt your loved one is carrying then you will not be held liable for it. Debt can’t be passed on or inherited through the death of a loved one.
Creditors are not allowed to reassign debts either. If you have a creditor that is calling and harassing you or members of your family you should contact an attorney. They will make sure to answer any and all questions you may have on the matter.
Everyone Will Know You Are In Debt
This is false, unless you tell them. The ‘Fair Debt Collection Practices Act’ prohibits creditors from discussing your personal debts with anyone but you. They are allowed to call friends and family to find you one time. During the call they are not allowed to say why, only that they need to speak with you.
If you are worried about your boss firing you because your salary or wages are being garnished to pay off a debt rest assured. Federal law prohibits employers from firing employees that are having their wages garnished. You’re safe.
Now that you are no longer at risk of falling prey to these debt myths you can go forth and pay off your debt with the truth at your side. If you ever have any questions about your debt feel free to give us a call. We’d love to have the opportunity to help and discuss the many options you may have.
We’ve helped several people across Minnesota find solutions to financial stress. Contact us if you would like to hear options to your financial difficulties.