Just like weight, it's extremely easy to put on debt but takes killer focus to pay it off. Debt snuck up on me because I found ways to rationalize why I'd allow it into my life again. It was a lot like having a dysfunctional relationship with a boyfriend with puppy dog eyes who always needs a loan. I read recently that 61 percent of Americans participating in a Bloomberg poll said they think Congress should be required to cut spending instead of raising the debt ceiling with no limitations. I feel as though I could learn a lot by applying that principal of restraint to my own personal finances. I also think I need to learn from my mistakes so I reflected on the ways debt snuck back up on me after I had freed myself of debt for almost 10 years.
Being swayed by low interest rates
One reason I accumulated more debt is because I was lured in by the historically low interest rate. I gave into my husband's idea to take out a car loan because the interest rate was less than 3 percent. However, we had the cash to buy the car at the time. Now, I really want to be free of the $300 a month car payment but I can't afford to pay off the $6,000 loan balance. We also refinanced at a 2.75 percent interest rate. We are not longer making the same $1,500 payments so our loan isn't being paid off as quickly even with the lower interest rate. We still owe $96,000 on our mortgage, which is higher than what it should be if I had stuck with my original accelerated mortgage payoff plan.
Paying broke relatives' debts
Another way debt snuck up on me was because of the debts of relatives we care about. One elderly relative went to pawn shop for a loan. The pawn shop charged $100 for an $80 loan, but wanted to keep the relative's antique ring until the loan was repaid. Although I would have given the relative the $100 right from the beginning, she was too proud until she feared losing the ring put down as collateral. Because I chose to help friends or family in various financial situations, I blew my own budget.
Having a case of frugal fatigue
According to a MSN Money article, a new report shows Americans are starting to take on more debt after years of shopping at dollar stores. I know I felt a lot of frugal fatigue after the Great Recession. Most of the recent purchases I made were not glamorous, however. I simply needed new tires for my car and a new air-conditioner for my house. Because I wasn't sticking to a budget, I had to put the little emergencies on credit. My credit card is now up to $2,500.
Falling into the zero interest trap
I let debt creep back into my life because I fell for the idea that I could use a charge car that promised me zero interest for a certain length of time. I put $300 on a store credit card for automotive repairs thinking I'd pay it off. However, just two months later I had more car repairs. Although I was tempted to recently purchase a new sofa on a store credit card, I realized I can't be as foolish as the American government that continues to run up a deficit every year.
I'd like to get back to being completely free of debt. To turn things around, I am now telling friends or family I can't afford to always help. I'm telling myself that I can only afford something if it's part of a spending plan that fits into my budget. I think I'll have my personal finances in order decades before the American government learns to balance a budget.
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