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Topics: Curbing Expenses |
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| 7 Expenses that Are Keeping You in Debt (Yahoo) |
Submitted by:
Tip Hero 09/09/2009 2:02 PM
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Here is some food for thought: According to this recent Yahoo!Finance article, 7 Expenses That Are Keeping You in Debt, "in the United States, 43% of families are spending more than they earn each year." This is slowly starting to change as more Americans begin to modify their spending habits, but digging oneself out of debt is no easy task and there are often a lot of challenges along the way. We provide a brief summary below, but we suggest you read Yahoo's article to learn more about these financial pitfalls:
1) Not Knowing Your Limits - "The Financial Times recently reported that U.S. banks are set to earn $38.5 billion this year from overdraft fees alone...." which means it is critical that you stay on top of your finances to avoid the overdraft fees and finance charges that are making the banks, well, 'bank'.
Set email alerts that notify you when your balance is low or send reminders when your bill is due. And here's a little Tip Hero tip: If you do incur an unexpected fee, don't hesitate to call your bank and plead your case. They may waive the fee (we've done this several times over the years and it has worked every time).
2) Fees, Fees, Fees - This applies to bank accounts and credit card accounts. Make sure to read the fine print regarding your "free" bank account, which may require a minimum balance or monthly direct deposits.
3) Paying the Minimum - "Approximately one in six families with credit cards pays only the minimum due each month..." at that rate you may never pay back your loan. Don't make a habit out of just paying the minimum.
4) Credit Card Cash Advances - The fees you pay for the convenience of fast cash add up fast. "According to CardWeb.com, the fees ten years ago were on average 2% of the amount advanced with a $2 minimum and a $10 maximum fee. Unfortunately, today that number has gone up to 3% with a minimum ranging from $5-$15 with no maximum fees." A high price to pay for convenience.
5) Payday Loans - Beware the payday loan! We recommend avoiding these short term loans altogether -- particularly because they are not well regulated and the interest rates are so high that paying back these loans can be incredibly costly. Payday loans have such a bad reputation that "payday services have been outlawed or severely restricted in 13 states..."
6) Not Negotiating - Don't be afraid to ask for help. If you are struggling with debt, call your credit card and/or loan carriers to discuss your situation. You may be able to work out lower interest rates or payment plans to help pay back the loan. And if they aren't willing to help, consider taking your business elsewhere.
7) Ignorance Is NOT Bliss - As many of our Tip Hero readers have suggested, keeping track of your finances is key to managing your financial welfare, and this is a critical component to achieving financial freedom. |
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