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Our society seems to be built around the idea of instant gratification. According to an article published on PsychologyToday.com, the digital age that we are in makes waiting irrelevant. That means our minds have a hard time getting around the idea of waiting to get what we want. For that matter, all the credit schemes are designed to encourage us to not wait. You can buy almost anything on credit, which generally means making small monthly payments for years on end at huge interest rates. That might seem manageable at the time but if you keep adding one small payment on top of another your debt will begin to grow exponentially. You will soon find that you have such a small amount of disposable income you can't afford to buy gas for the car you're still trying to pay off. If there's something you really want, whether it's a new car or new living room furniture, create a savings account specifically for it and deposit a set amount of money into it every month. You might be surprised at how quickly you’ll have enough money to pay cash for the stuff you really want.
7. Pay off your debts with your savings
As noted above, the more debt you have the less disposable income you have. If you have $1000 in debt accruing interest at an APR of 18% or higher and $1000 in a savings account that pays 3% APR – this is a no-brainer. Use the $1000 in your savings account to get rid of that $1000 in debt. You'll be able to breathe easier knowing you've eliminated that debt and will now have more disposable income some of which you could use to replenish your savings.
8. Understand that interest-free credit is not free money
There are numerous credit cards available now that offer interest-free periods from 6 to 18 months. But if you sign up for one of these cards don't make the mistake of thinking that this is free cash. These interest-free offers are meant to encourage reckless spending so that when that introductory period ends you'll have a huge amount of new debt at an interest rate that could be as high as 19%.
The fact is that most of us will have to deal with debt throughout our lives. Whether it's buying a new car or a new house most of us will just never have enough cash available to pay for them. Now, when you're still in your 20s, do your best to avoid debt. Try instead to learn to enjoy the simpler things in life and not complicate these years with financial worries. Use some impulse control, do some calculating and you’ll have a fun, debt-free and fulfilling decade.