Learn how to steer clear of the top three debt traps in part two of Debt Perceptions. Stay tuned!
Let's focus on three areas where people commonly fall into debt (overdraft, cars and consolidation) in this second installment of Debt Perceptions: How to Not Get Conned and More.
The most misleading name of any product on the market, overdraft protection gives you the perception you are protected from over-drafting or paying an overdraft fee. Is that right? Nope. Instead you are protected from the effects of your overspending resulting in a lack of awareness. Thus, you're thrust into debt with the bank and/or your connected, dwindling savings account. Let me be clear. If you overdraft your account, you still pay the fee every single time. You have paid your bill or expense but you're still in debt. One of the main revenue generators for banks, overdraft protection made banks $34 billion in profit in 2017 alone! For more on this and a visual breakdown of how it all works, check out "How to Not O.D. on Spending."
Driving a new car is safer, more reliable and will save you in the long run, right? Wrong. Paid for cars free up more money to build wealth! Most people come up with excuses. One client bought a Dodge Stratus in 2009. The car had a fender bender, hail damage and a missing hubcap but it only had 100k miles, a decent running engine and only cost $1,000. They had the car for at least two more years and added 50,000 additional miles in that time. They maintained the car, changed the oil, replaced the tires, etc. The car was even more reliable than his spouse's 2011 Dodge Journey and it cost way less!
Needless to say, used cars are smarter and they save you money. Check out the following videos, "Why Used Cars Are Smarter," "How to Drive Free Cars for Life" and "How to Buy an Actually Reliable Safe Used Car" to learn more. You'll even find a free comprehensive checklist to help you in your used-car-buying experience. Now, you're officially out of excuses to get a car loan again!
Most Americans are slaves to their payments and, when things are tight, they turn to consolidation. After all, if payments are more manageable than that would solve things.... right? The truth is consolidation is a bandaid! You're transferring the debt to a different place and setting yourself up to be in debt longer. Additionally, the behavior of overspending hasn't changed either and the consequences will come around to bite you. Finally, you cripple your money's ability to work for you to pay off debt because, essentially, you have a payment for a giant loan rather than utilizing the research proven best method for killing debt. For more on that method to pay off debt and fast, check out "How to Crush Debt for Good!"
That wraps up this installment of Debt Perceptions. Be sure to check out part three next week so you can continue finding more ways to fund your dreams!
Question: Have you fallen prey to one of these debt perceptions? Let me know in the comments. It's not too late! I would love to help you. Additional Action Items: Come join my FREE Facebook community, the “Strong Together Money Community,” in order to stay informed and encouraged as you grow in your financial journey. Also, check out my free e-book to gain additional tips on how to save and budget wisely. Not sure how to break free of that cable bill without feeling like you're missing out? You can cut those costs while still keeping your content! For more information, check out my Cable Cutting Academy today!