Most advice about personal finance problems is simple and easy to understand, but following the advice is often much easier said than done. Acquiring debt can take place either quickly or gradually over time, and the accumulated amount can wreck a person's financial future. Very often, people commit the same, common mistakes, and here are three that must be avoided.
One such error is making financial decisions based on nonfactual or incomplete information. It is tempting to transfer a credit card balance to one that offers a 0 percent annual percentage rate in order to ease the pain of it paying off. However, 0 percent cards often come with additional charges and fees that only worsen the financial situation.
Another mistake is having the wrong credit card. Most people make hasty decisions about opening a credit card account without thinking about its suitability. For example, business travelers should look for a card that offers frequent flier miles. Or someone who drives a commercial vehicle for a living might have a card that offers bonuses for gas purchases.
Lastly, although loans usually have to be taken out for college tuition, a car or a home, some people don't borrow responsibly. Loans for these purchases are all considered "good" debt, but borrowers need to think hard about how they are going to pay them off.
Avoiding these three crucial mistakes can greatly reduce the risk of sinking into overwhelming debt. However, some kinds of debt cannot be avoided, such as in a medical emergency. At such times, residents of Nassau, New York or elsewhere in the country may wish to consider personal bankruptcy.
Debtors may choose between Chapter 7 and Chapter 13. In Chapter 7, petitioners are required to liquidate most of their assets, but they are then given a fresh financial start. To learn more about the particulars of Chapter 7, those in overwhelming debt should consult a legal professional who specializes in bankruptcy.
Source: Foxbusiness.com, "3 Money Mistakes That Can Land You in Debt," Ann Hynek, Sept. 6, 2013