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Some people might have guessed exactly what that number is. According to the USA today that was the average level of credit card debt for homes in America. Now, it’s important to realize a few things about that number. First, if it doesn’t seem that high to you, your issues with debt are probably more severe than you realize. Second, that’s just credit card debt. A lot of people will have other sources such as short-term loans, late bills and so forth. Third, and perhaps most importantly, that’s actually an improvement from the last few years, but it should still shock and scare you.

Some people might not think that $3600 is a lot of money and there might even be people reading this who know they could pay it off, no questions asked, right now. If you’re one of those people, good for you! But you have to remember that this probably means you’re earning a salary a lot higher than the national average which is just $35000. That number may seem large, but it’s not a lot to play around with when you start to think about home bills, mortgage repayments and annual expenses. Adding over three thousand dollars worth of debt to that doesn’t leave a pretty picture. And let’s not forget that people living on credit were partially to blame for the 2008 housing crash.

You also need to think about outliers, and they’re important to consider because you could be one of them. You might have a credit debt that’s a lot higher than that average. If you do, you could be one of the 12 percent. 12 percent, it’s not quite as attractive as the 1 percent if we’re honest. 12 percent is the amount of Americans today who expect to die in debt, and they’re probably right. Once you reach a certain level of debt, it can be very difficult to fix things. That’s why if possible, you want to avoid debt completely. You want to make sure that it doesn’t build up and that you escape the debt trap. A good place to begin when examining this possibility is those credit cards because plastic isn’t fantastic.

Are Credit Cards Ever Useful?

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Credit cards are a way to live past your means and trick you into thinking you can afford more. You might say in the right hands credit cards can be a valuable, useful tool. For instance, you can use them to buy bigger purchases that you otherwise wouldn’t be able to afford. But what purchases are we even talking about?

Large, expensive purchases are usually, tech, vehicles, and property. Well, you should just cut out the tech and vehicle purchases because they depreciate so quickly the investment becomes worthless in a matter of years. As for property, this is really the only time you should willingly go into debt to buy. If you want the full list of things that you shouldn’t go into debt over, have a look at the Fortunate Investor website. This has some fantastic info on what people usually buy on credit and why you should avoid these purchases at all cost. If you can afford them outright, great. If not, then it’s time to think about saving.

As such, you should really think of a credit card as an emergency or a last resort. And, if you are tempted to use it to buy something that you don’t need, just remember the money you’re spending won’t be yours. And, you will have to pay it back.

It’s also worth dispelling an important incorrect belief before we move on from credit cards. A lot of people think that borrowing improves your credit history. It doesn’t, it boosts your credit score. There’s a difference. Your credit score can be low, and your credit rating will still be great. If that’s the case, it’s because you haven’t borrowed enough. But your credit history will still be free from any issue with debt. So, if you do need to take out a loan in the future, you will be able to. Even if your credit score is low.

Saving Up Is Hard To do

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You might wonder why Americans have such a high average debt per household and the answer is quite simple. Research shows that Americans do struggle to save. Instead, we like to spend and essentially, live life to the full. Totally understandable, but saving is important. It puts us in a solid position for the future, and we need that. It also helps us avoid debt.

There are lots of reasons people go into debt. It might be to pay medical bills, maintenance work on their home or perhaps just to get by during a time of redundancy. Don’t assume that everyone who is in debt has overspent on luxuries because it’s not true. Some had no option but to borrow money and then couldn’t afford to pay it back.

The trick is to make sure you have enough money in savings to handle emergencies. To do this, you just need to save enough money each month. How much money you save is entirely up to you, but even a little would help your financial position a lot. Put yourself on a budget and keep any extra cash you make through the month. That way, you’ll always have something to fall back on.

Don’t forget that if you save a little, you can then increase the value of your savings through smart investments. One of the easiest investments would be to spend money on your home. By doing this, you can boost its value and then sell it on. That way, you’ll be making a profit while benefiting from any of the changes that you decide to make. Is this the only way to boost your money through investments?

Of course not, you can also look into opening a high-interest savings account. This is the perfect example of a passive income. You won’t have to do anything, and your money will steadily increase. It is, on the other hand, worth pointing out that interest rates on this account leave a lot less to be desired.

Always Be Job Hunting

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If we’re looking at one of the most common causes of debt, it’s definitely a loss of income. When you lose your income, you’re trapped in the position where you don’t have any money to spend. As such, the only option available is to borrow, and this often leads to debt. It’s a nasty road to be on, but can you avoid it. Of course, you can’t avoid redundancy completely but you can certainly prepare for it. A wise man once said that the best time to search for a new job is while you still have your old one. Essentially, this means that you should always be keeping one eye on the job market, even if you’re happy in your current position. That way, even if you are made redundant, you should be able to find a new place of work before you lose your income completely.

You might also want to make sure that you have a solid employee profile online. You might think it’s odd to start talking in terms of career when we’re thinking about financial issues. But is isn’t really. Tackling your financial problems will certainly be a lot easier if you can avoid a long duration of time when you’re not earning an income at all.

Avoid The Borrowing Business

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When we’re looking at the dangers of borrowing money, it’s not just the credit card that can be dangerous. You need to avoid the lenders as well. Lenders have a way of representing themselves as charities, helping those in need. But they’re not really. They are just profit makers and they are always profiting off your losses. If possible, you should completely avoid using them.

Instead, you should think about swallowing your pride when you need a loan. Ask family, ask friends or anyone else who you know you can trust and who won’’t charge interest. The interest is the killer here, and it can be extortionate when offered by a lender business.

Of course, the other option is to make sure that you never have to borrow in the first place. Saving will definitely help, as we have already discussed. But, you might also want to think about buying some property. There’s debate about whether it’s financially smart to buy or invest in property right now. But the bottom line is that when you have property, you have capital that you can depend on. In fact, a lot of experts agree that property is one of the securest and most sensible ways to invest your money.

So, while debt is certainly a major issue for a lot of American’s it doesn’t have to be yours. There are some ways that you can stay out of debt and protect your finances. Of course, this will require you to be frugal in some cases and think ahead in others. But, if you can avoid debt throughout your entire life, you will definitely be one of the lucky ones.

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