Free Debt Relief : Don’t Do Debt Dumb Deeds
“It is not coincidence that dumb comes after desperate in the dictionary”
J Daniel,-Gentleman,Scholar and Weisenheimer
I’m desperate to be out of debt. Are you? If you are then you need to be careful. Desperation often leads to making dumb decisions. And then dumb decisions lead to more desperation which leads to more dumb decisions…ad infinitum.
Dumb Decision
You have some debt it is fairly innocuous debt( low interest rate that is deductible. You get so gung Ho and desperate about getting out of debt. You don’t save up a cash cushion but you send every dollar you have to pay off the debt. Then you lose you job, get injured or have a sudden expense. Now you can’t make the payments on that debt or things like rent,food, and electricity. Without that cash cushion you are in deep doo doo.
Make sure you have a cash reserve that can keep body and soul together long enough for you to get on your feet. The minimum I would keep is a three month reserve. David Ramsey recommends a thousand dollars. Like to multiply the my gross salary for one month by 3 and make that number my emergency fund savings goal.
Dumb Decision
Pay day loans. Exorbitant interest rates for the privilege of borrowing a little cash. It is probably the most expensive money you can borrow. But people do it all the time because they have become desperate.
Dumb Decision
Closing all your credit card accounts after you pay them off. Doesn’t seem dumb does it ? But it is at least a little dumb. Credit cards can have a role in in you financial life as an emergency funding source. Closing all you accounts mean your more vulnerable to bad luck. Plus it is more than a little dumb if you are closing accounts in anticipation of doing something like buying a house. Remember closing credit card accounts adversely effects you fico score and a lower fico score effects interest rates your eligible to get on you loan.
One of the reason people end up mired in debt is they fail to think about the consequences of their actions. Don’t act desperately and make you things worse.
Ps If you really can’t keep from using your card feel free to close accounts. Just keep one the oldest one maybe for emergencies.