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3 Financial Mistakes That Make Employed People’s Debts Worse


When you start thinking about addressing your debt problems, it is worth reiterating that at least some of the factors that caused you to be in debt are beyond your control.  For example, stagnant wages, high prices of groceries, and unaffordable healthcare are probably eating up a big portion of your paycheck.  It is also worthwhile to start with gratitude when you strategize about getting out of debt.  You have a stable job and a bank account, and your credit history has enabled you to make several purchases on credit.  Maybe you have had to downgrade your lifestyle, consolidate your debt, or file for bankruptcy protection.  How do you avoid getting into these problems again?  Creditworthiness is a double-edged sword, and it is easy to borrow beyond your means.  For help avoiding taking on unaffordable debts or dealing with the ones you have, contact a Philadelphia debt relief lawyer.

Thinking About Affordability in Terms of Monthly Installment Payments Instead of the Overall Cost

With car loans and similar big-ticket purchases where you pay in installments, it is tempting to base your decision purely on your monthly payment.  A car that only costs you $500 per month sounds downright cheap.  Car dealers know this, and their advertising content focuses heavily on the affordability of the monthly payments.  Of course, vehicle prices have been at an all-time high since the beginning of the COVID-19 pandemic, and car loans with a seven-year repayment term are more common than they have ever been.  Before you sign on the dotted line, think about all of the interest and fees that you will be paying over the term of the loan.

Keeping Most or All of Your Income in Your Checking Account, Where You Can Spend It

In today’s economy, having a checking account is something to celebrate, and having more than enough money in it to pay your bills and the minimum payments on your debts is nothing short of amazing.  A surplus of money in your checking account can be a dangerous thing, though.  You can too easily spend it without even realizing how much you are spending.  It’s fine to keep a little bit of extra money in your checking account for emergency purposes, but if your surplus is more than a few hundred dollars, you should put it in a savings account or use it to pay down your debts.

The Big Purchase Treadmill

The worst is when one big purchase begets another.  You buy a big house on a lake, so you buy a boat.  You need a strong vehicle to tow your boat, so you buy a pickup truck.  Before you know it, you are making payments on loans for all three.

Contact Louis S. Schwartz About Middle Class Debt Relief

A Philadelphia consumer law attorney can help you if a little bit of prosperity has caused you a lot of debt.  Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.



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