Cash Money Life had a great article on 5 Debt Traps. I HATE debt, who doesn't? I can't wait until my house is paid for, my car is done and my student loans have completely vanished.
Here are debt traps that you should avoid:
- Payday loans. I hope this trap is obvious. When I was younger, I distinctly remember my dad laughing at the TV whenever payday loan commercials would come on. The fees are exceedingly high, and you just fall into a crazy debt trap circle that you might not be able to get out of.
- Having maxed out cards and only paying the minimum. You are ruining your credit and also falling into a hard to get out of trap. I pay all of my credit card balance completely off every month. I have ever carried a balance.
- Buying too much house. You will most likely get approved for a mortgage that is too big. We were approved for a mortgage of around 33% more than what we could actually afford. You should definitely go under what you are approved are.
- Having too much in student loans. Read my past posts on why I don't regret my student loans, and also my other post on how student loans might be bad for you. Carefully consider your degree, the loan amount and the school you are going to and make sure it's worth it.
- Co-signing on a loan. Make sure you trust this person, or it will end badly.
What other debt traps do you think I left out?
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.