Today our generation now focuses on the concept of “buy now and pay later.” People tend to use credit cards and loans to pay for almost everything. They get into the habit of not saving money before purchasing what they want to. Here are the worst “buy now and pay later” methods not used properly:
When you buy a home and take a mortgage loan it’s technically not yet yours completely. You’ve borrowed money from most likely a bank and are financing it. If you stop paying the mortgage along with it’s hefty interest payments, the bank will take your home away from you as collateral. A mortgage is a great investment but also a huge responsibility. When buying a home, talk to a certified financial planner to help you decided how much money you can afford to spend on a home.
You may want to read our article on How Much Mortgage Can I Afford?
Millions of people drive cars for means of transportation. Cars have become a necessity: from commuting to work, to errands on a day to day basis. When buying a car from the dealership and you’re taking a loan to pay it off. You’ll see a lot of people on the road driving expensive cars. What you don’t see is how much they are paying for it. Chances are they haven’t paid off their car in full yet, or could be leasing it.
Credit cards are those small rectangular cards that fit in your wallet. When you swipe it through the machine, it pays your bill. Credit cards companies advertise incentives to users to use them. Users get points that can be use to purchase other goods. The catch is that if you don’t pay your bill on time, they charge you up to 19.99%-29.99% interest. It’s a good idea if you pay it all off before the deadline but the majority of people don’t and these companies make a fortune.
You may want to read our article on How To Lower Your Credit Card Interest Rate
We’re all pretty wealthy, we can buy almost anything we need and want at any given time. If you want to get out and stay out of debt, avoid buying mortgages and cars you can’t afford. Avoid taking loans for longer than you need it. Our monthly mortgage and car loans shouldn’t exceed 50% of your monthly income. If you absolutely need to buy now and pay later, use a low interest credit line at the very least.
debt, PERSONAL FINANCE