Society has changed in the last 100+ years since the Great Depression. That's an understatement. The way we look at money and debt have changed because of a few debt myths that society now believes are facts.
Fact: Millions of Americans are in debt. OUCH!
We live in a very must have it now society where credit cards flow free, and it's nothing to have bad credit with a high-interest rate. There was no such thing as credit in the Great Depression; they had to save every penny for items they needed and wanted. Ever remember watching The Waltons? They had to grow food, raise a cow for milk, and save money in a hidden change jar. They wore clothes with holes and mended them. They lived within their means and didn't go into debt.
Top 3 Important Debt Myths Debunked
Myth: Debt is the American Way
While it’s true that millions of Americans are in debt, being in debt is not living the American dream. Today’s society has grown up believing you have to go into debt to have things you want such as nice cars and nice homes. In reality, you should be saving for what you want, save now buy later, we as a society have it very turned around, buy now pay it off later. More and more families are realizing this and vouching to become debt free and teaching their kids to do so as well.
Myth: Once in Debt, Always in Debt
This myth is probably the easiest to believe because it’s so easy to get caught in the ‘cycle of debt’ – and a vicious cycle it is. When you are in debt, you are a slave to the lender of the money, if you don't pay on time they can come and takes your house, your car or more. You are paying MORE for those items because you also have to pay interest, so you have less cash to spend on your living expenses. Then next time you need something you have to take out another loan because you weren't able to save up the money you need.
But good news! This cycle can be broken! But you must make a conscious decision not to take on any more debt. This can be hard because you will go without for quite a bit and as said above we live in a very ‘must have it now' society. Think about it, as a kid I remember having to take a picture and getting the film developed, taking a few days. If you were lucky, you had a camera where you had to wait for 5-minutes for the film to dry. Today you take a picture, and you can see it instantly, we aren't taught to wait for anything anymore. Back to the subject!
It can be difficult to go without but you have to have buying control. Then you need to work on your budgeting and get it in line. Then work on how to save money. There are ways to save painlessly! Then pay off your debt. The most popular way to do so is the Dave Ramsey way, but there are many ways to do this. The basics on this is to start paying off your smallest debt first and while doing so make the minimum payment on the rest of your debt. Put any extra money on the debt you are working to pay off. Once that debt is paid off, then take the amount you were paying on that debt and apply it to the next lowest amount. Keep doing this until you are debt free! This is a snowball effect.
Myth: I Need to Build My Credit for the Future
You only need a credit score if you are buying things ON credit. If you are paying cash then why do you need to have a credit rating? See it's a cycle that just leads you down and hole to stay in debt. Banks and creditors are very smart with the mind games, but you are smarter!