How do you end up in financial distress? There are many reasons, and, when it comes to facing a potential bankruptcy, very often the biggest triggering event is a medical crisis or a divorce. But there are smaller factors that can add up to your finding yourself in a big crisis. This is the third in a series on what one bankruptcy attorney identifies as the “Top Ten Personal Financial Mistakes” people make. His list is useful for all of us to review and consider, and his posts link to helpful resources available on the web. Be sure to click on the link below to his post and check out the resources he provides, too.
Hooked on credit cards? Most people calculate their minimum monthly payments when deciding to make a new purchase and fail to take into account the accumulating interest on those accounts. The time to pay off a $5,000 balance at the minimum payment amount on a credit card can take over 20 years!
Sometimes we forget that using a credit card is borrowing money. It’s free or very low cost money if you pay the balances off in full each month (low cost instead of free if you pay an annual fee for use of the card) — but the borrowing is not free if you pay less than the full amount owed. The problem often is that the expenses add up little bit by little bit without our noticing. We aren’t paying attention, we start paying less than the full amount thinking we will deal with the balance later and time passes and we have not dealt with it.