We all must have owed some amount of debt at a particular point of our life. Student loan debt, mortgage debt, credit card debt and auto loan debt are a few types of debt that we owe. Everyone seems to have their own kind of debt management options that helps them abolish their financial obligations. However, there are a few debt myths that can change your life and make you amass further debt. Though there is debt management companies that help debtors pay off their debts, yet it is important for you to stay aware of the credit card myths so that you do not let them take a predominant role in your financial beliefs.
1. Paying the minimum amount on your cards is fine: If you think that it is fine to pay off the minimum monthly payments only, it will take years and hundreds of dollars to pay off your debts entirely. Although, there’s nothing wrong in making just the minimum monthly payment but you must always try your best to add payments in excess of just the monthly payments so that you can become debt free sooner.
2. You can keep on borrowing to pay off debt: If you think that it is fine to keep on borrowing and pay off debt, you’re again mistaken. Though it may apparently seem that getting a debt consolidation loan may ease off the pressure of making multiple payments to multiple creditors, but this is far from being true. By taking out the debt consolidation loan, you’re again liable to repay it within the stipulated time period. Thus, it is always better to manage your personal finances and take steps on your own while repaying your debts.
3.It takes forever to pay off your entire debt: There are many people who refrain from seeking professional help as they think that it takes forever to get rid of the all the debt that you owe. However, this is not the actual fact and if you can follow a proper budget and keep a track on your income and expenses, debt reduction will not take much time for you. Lead a financially disciplined life to secure a better financial future.
4. Filing bankruptcy can solve all problems: There are many people who think that filing bankruptcy can solve all your financial woes. However, you must consider the negative effects of bankruptcy before resorting to it. Bankruptcy can trash your credit score and will stay like a blotch on your credit report for the nest 7-10 years. Instead of filing bankruptcy, get help from debt consolidation or debt management companies so that you can easily repay your debts.
Every financial instrument has some myths and facts involved in it. You must be aware of the myths and believe in the facts so that you do not end up losing a larger amount of money than you could have ever thought. Don’t feel embarrassed in seeking legal debt help from debt management companies as avoiding your debts can get you into dire financial straits.