Tag Archives: funds

Things to Know Before Getting Your First Credit Card

There are many upsides to having a credit card, such as building one’s credit score, making certain purchases, and even earning cashback points. With the right practices and money management habits, people can do quite well and set themselves up for financial success. However, without the proper knowledge, individuals who manage to obtain credit cards can wreak serious damage upon their financial standing and sink themselves into debt for years or decades to come. For these reasons and more, an awareness of the following facts, prior to getting one’s hands on a credit card, is absolutely paramount.

The Charges Must Be Paid Back

Most people are very young (18-22 years old) when they receive credit cards within their own names. While individuals in the foregoing age range are, in fact, adults, they may not necessarily have the knowledge of everything which comes along with credit card ownership. Virtually everyone has heard horror stories of someone swiping their card repeatedly and then being unable to pay the monthly bill. An inability to pay the bill when it comes due results in subsequent interest charges.

Interest is a hole which can take years, decades, or even a lifetime to climb out of. For this reason, starting off with a low credit limit (no more than $500) is usually best. However, regardless of the credit limit, people must be sure to pay back the money which they “borrowed.” It’s worth noting that certain credit card plans provide grace periods before charging interest on unpaid balances. Not all credit cards plan do this and, to be on the safe side, anyone who charges a credit card should be sure to make the appropriate payments before or when the bill comes due.

Building Good Credit Takes Time and Discipline

Merely having a credit card and paying off the balance will not immediately engender good credit. Time and consistency are considerable factors in the development of good credit; people who are truly serious must ongoingly pay off their charges and abstain from incurring any interest. Moreover, credit card users are advised not to spend more than 30% of their credit line. There are no penalties for surpassing the 30% threshold, but adhering to it truly helps one establish their credit and finances.

Credit Cards are Not For Everyone

Despite the upsides of credit card ownership, they are only applicable when people punctually pay off their balances and avoid debt. Individuals who struggle with money management skills or suffer from low income might do well to hold off on obtaining a credit card. Credit should only be used by people who know they can afford to pay back what they’ve charged. Credit cards are not free money; at some point, the bill always comes due.

 

Authored by Gabrielle Renee Seunagal

How to Repay Debt

In the best of worlds, nobody would incur any debts. Unfortunately, there are countless people who are up to their eyeballs in debt. Ideally, incurred debt is something which should be paid off as quickly as possible; yet, many individuals find themselves struggling to pay back the money they owe. The subsequent interest which often accompanies unpaid debt doesn’t make matters any less complicated. Thankfully, there are a variety of strategies which can be employed in order to effectively pay off debt.

Make Ongoing Payments

Indebted individuals have a tendency to avoid their debt. The avoidance is often motivated by dread and reluctance to face the large sums of owed money. However, avoiding the debt will never erase its existence. The only way to free oneself of debt is to make ongoing payments.

In this day and age, merely paying the minimum balance is not going to cut it. Payments should be made as frequently as possible. Each time an indebted individual receives a check, he or she should be putting aside a percentage of funds (or a specific dollar amount) to pay off what they owe. Initially, this can be uncomfortable and may even require some budget modifications. However, repaying debt in a timely manner is always wiser than idly wasting time and allowing interest to accumulate.

Increase Income and Profit

Despite the massive pitfalls of failing to repay debt, a lack of funds is a problem which many people struggle with. Therefore, individuals who literally cannot afford to pay down their debt should strive to increase their income. This can be done via asking for a raise, advancing one’s career, or even starting work in the gig economy or freelance market to create an additional stream of revenue.

Live Within Your Means

Countless people incur debt in their attempts to live above and beyond their means. While this type of money management is irresponsible and reckless, it’s particularly dangerous for individuals who have yet to repay owed funds. Anyone who is struggling with debt should proactively work to lower their expenses; this can almost always be done. Cutting back on unnecessary purchases, eating at home, and limiting entertainment fees are some prime examples of ways to reduce costs. Some people spend their entire lives in debt all because of poor money habits.

Avoiding Debt

Having to repay debt is no fun whatsoever. Debt holds people back from financial success, home ownership, the ability to live independently, and many other opportunities which life has to offer. Those who are able to take advantage of certain opportunities, even in spite of their debt, will not have the same quality of experience as their debt-free counterparts.

To make a long story short, debt should always be avoided. In the event that avoidance is not feasible, repayment should occur as quickly as possible.

 

Authored by Gabrielle Renee Seunagal