Thursday, 7 May 2015
In debt? You're not alone.
Millions of Americans are thousands of dollars in debt, due in part to economic woes of recent years. But there are ways to manage your debt and boost your financial strength.
In an ideal world, you would be able to pay for everything without taking out a loan. Of course, some items are just too expensive for all but the super rich to buy with cash. Most people wouldn't be able to buy a house without getting a loan, of course. But a mortgage makes sense financially because not only is the interest rate low, the mortgage payments are tax-deductible.
Similarly, most people cannot buy a car outright so they take out loans. While car payments don't get a tax break, car loans don't generally carry very high interest rates.
On the other hand, some loans do require borrowers to pay high interest rates, such as payday loans. Some credit cards also carry high interest rates on monthly balances.
While loans can be a useful way of acquiring important items such as a house and car, they also can become a burden if you're not careful about how much money you borrow and what types of loans you're taking on.
You may have received offers to consolidate your debts to reduce your interest rates. That can be a good choice in some instances, but before you agree to a consolidation, experts advise that you consider these issues:
It takes discipline and knowledge to get on top of your finances when you face a lot of debt. If despite your efforts you feel like you're not getting anywhere, you might consider contacting a reputable credit counseling service for help. Most of these groups are non-profit organizations. Look for ones that are clearly affiliated with a university, a housing authority, or a governmental agency - they should be able to provide low-cost or even free services.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
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