Fact: Millions of Americans are in debt. We are a society addicted to “immediate gratification.” We’ve been brought up in a society that teaches us that we have to have it all and we have to have it all right now!
How many of these debt myths have you been taught to believe?
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 generation has grown up believing that in order to have things you want, such as nice cars and nice homes, you have to go into debt . This is not true, however. 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.
Myth: Once in Debt, Always in Debt
It is very easy to believe this myth because we can so easily get caught up in the ‘cycle of debt’ – and it is a vicious cycle. Once you go into debt for something, you become a slave to the lender. You no longer have the same cash flow you once had. Now you must make payments to the creditor or lender, so you are not able to save as much. Then, the next time you need something, or want to buy something, you reach for your credit card or get another loan and incur even more debt. Each time you do this it seems to become easier to do, so your debt grows. It truly is a vicious cycle.
Don’t despair, however, because the cycle can be broken! It will be difficult, but it can be done. You must make a conscious decision to not take on any more debt. This can be hard because you’re going to have to do without things and you’re going to have to learn how to control impulse buying. But as with anything that requires discipline, such as dieting or exercising, you can do it. Then, start to use the debt snowball method to reduce you debt. Pay 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
This may be the biggest myth of all. It is ingrained in us as Americans that we have credit to buy things. But, when you learn to save money and to pay with cash, you won’t need 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.