Some Common Debt Myths You Were Taught?

In Lifestyle by Kevin Jimeno

Fact: Millions of Americans are in debt. We’ve been brought up in a society that teaches us and literally throws it in our face that we have to have it all and we have to have it all right now. See if you’ve been taught these same debt myths:

Myth: Debt is the American Way

While it’s true that millions of Americans are in debt, being in debt is not truly living the American dream. Today’s society has grown up believing you have to go into debt in order to have things you want such as nice cars and nice homes. However, this is not true. When we learn to live within our means and how to save money, we can buy those nice things with cash, without having to go into debt. The only debt you need is smart debt with a plan, I’ll explain more later…

 

Myth: Once in Debt, Always in Debt

This myth is probably the easiest to believe because it’s so easy to get caught in the ‘cycle of debt’ – and a vicious cycle it is. Once you incur debt, you become a slave to the lender. You no longer have the same cash flow you once had. Now you have to make payments to the creditor or lender so you’re not able to save as much. So, the next time you need or want to buy something, you reach for your credit card or get another loan and incur even more debt.

However, the cycle can be broken. You must make a conscious decision not to take on any more debt. This can be difficult because you’re going to have to go without some material things and you’re going to have to learn how to control buying on impulse. But as with anything that requires discipline, such as dieting or budgeting, you can do it. Then, start paying off the smallest debt first and make the minimum payment on the rest of your debt. Once the smallest debt is paid off, then take the amount you were paying on that debt and apply it to the next smallest. Once that’s paid off, do the same and continue this until all your debts are paid off. It’s called the snowball effect.

Myth: I Need to Build My Credit for the Future

Once again, this myth is ingrained in us as Americans. We’ve been taught to buy everything on credit. When you learn to save money and to pay with cash flow, you won’t need so much credit to buy things. If you’re fortunate enough to be reading this at a young age and haven’t incurred debt yet, be encouraged and learn to budget and save for the things you want and need in life. Your cash flow will be much richer and so will you. There is smart debt and dumb debt, which one do you have?