Skip The Rut & Avoid Debt

When it comes to money, people often find themselves stuck in a financial rut because of bad management. The best way that anyone can avoid getting themselves into a mess is to be proactive about how money is managed and spent. The trouble is, money is such a tempting thing and getting into debt is far easier than it should be. Many people fall into the trap of short-term satisfaction with credit cards and loans and then have to suffer the long-term difficulties of making repayments.

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It can be very easy to run up a mountain of debt through credit cards as they are so very easily available. Trying to avoid being in a rut means a lot of self-control and willpower, and only paying for things as you can afford them. The trap happens where you need to borrow and repay money on time to build an efficient credit rating, and that can spiral out of control. There are companies that are out there like creditrepair.co that can assist with fixing your credit rating as you need it, but it sometimes can be better to avoid the bad credit in the first place. There are some ways you can manage your money and not get stuck in a rut of debt, and we’ve got some of those below for you:

Keep Employed. Okay, so it’s not always possible, but maintaining a secure level of employment is a great way to minimise debt. Secure income means not having to turn to other means to get things paid, as you have a regular amount coming in each month. By ensuring you don’t lose your job, you can keep things smooth and ticking over correctly. Losing a job can happen randomly and sometimes this can be without fault, and you want to avoid this happening as much as possible. Maintain a network with your colleagues and clients so that if recession hits and you are made redundant, you have contacts in your field to fall back on.

Pay Taxes. Taxes are one of those bills that you must pay no matter what happens. Owing money is hard enough but owing the IRS is a whole other ball game. Make your tax payments a priority as early as possible in the year, and be vigilant about keeping money aside each month to pay for your taxes. Contacting the IRS and enquiring about extensions or making part payments is going to help if you feel like you can’t manage your usual tax bill, but if you don’t call them that’s where the issues begin. Avoid that debt by being organised.

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Ultimately, you have to be savvy. When it comes to buying the things that you want, only get the things you can afford. If you can’t afford what you want, then it’s time to save up and wait. Don’t just move onto the credit cards or tap into your savings as you will likely need your savings! Be financially smart and you can reap the reward as you go!

Teaching Kids The Money Game

Those of us who didn’t get much financial education before we joined the working world often wish we could go back and do it all over again. But we also remember that financial education was not the most thrilling aspect of our childhood. Even though our parents explained the concept of saving money in order to afford the things we wanted, our eyes glazed over whenever complicated abbreviations and percentages were mentioned, then we just got confused about what it all meant. Financial education is an essential part of adulthood, but it’s not the most engaging topic for some young adults, let alone small children.

There are many tools at hand to help parents teach their children about financial responsibility, especially debt and lending since the next generation is just as likely as the Millennial generation to enter the working world with a huge amount of debt from student loans. Being open about your own finances to set an example, helping them build a budget from their savings, and explaining the difference between good and bad debts are just some of the ways you can teach children about money. However, to make it a little more engaging for young children, you can use games to make finances fun, yet still teach them practical lessons that will serve them well when they reach adulthood. Here are just a few board games that were created specifically to teach children financial responsibility.

Monopoly

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Most parents – and people with siblings – will recognise Monopoly as the game that started off amicably, but would soon descend into chaos and cause family feuds over Christmas or Thanksgiving. The earliest known version of Monopoly, known as The Landlord’s Game, was designed by an American, Elizabeth Magie, and first patented in 1904 but existed as early as 1902. Magie, originally intended The Landlord’s Game to illustrate the economic consequences rent, and the concepts of economic privilege and land value taxation.

When it first appeared in the 1930s, it had been significantly simplified and Monopoly was simply intended to teach children about paying rent, buying property, and how unexpected circumstances could suddenly lead to financial trouble. It even teaches children about some of the real-life options available to them to get out of debt, such as borrowing money from the banker, or mortgaging one of their properties until they next pass Go and collect $200. Monopoly teaches players money management and the impact of financial and investment choices and situations. Most importantly, it teaches children that life is unpredictable and not always fair, but you still have to pay the banker.

The Game Of Life

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For parents looking for a game that can give an accurate representation of life and the effects your decisions have on finances, The Game Of Life is as close as anyone can get. This game teaches children the effect of education and career choices on income, the impact of taxes, the importance of early investing, and even the cost of compound interest and loan payments. It does everything except teach kids about debt consolidation, but more complex explanations can be found at DebtConsolidationUSA.com, or any other financial websites. What sets The Game Of Life apart from Monopoly, is that it stimulates a person’s travels through his or her life, from college to retirement, with jobs, marriage, and possible children along the way.

Unlike Monopoly, which starts everyone off on an even footing, The Game Of Life can show children that even the choices they’ve made in their early years can have long-reaching consequences into adulthood. Therefore, it subtly explains why they’re receiving a financial education even though they won’t have to worry about bills and credit for several more years. As a result, they might be more willing to pay attention the next time you sit down with them to discuss the family budget.

Payday

It’s never too early to teach kids about the excitement and anticipation of payday; even most adults celebrate this day with the enthusiasm of a public holiday. As a board game, Payday is not too different from Monopoly and The Game Of Life. The player with the most money wins, kids learn about paying bills and dealing with unexpected expenses, and surviving the game until you get more money. The difference is that the board is set up like a 31 day calendar, and the players move through the month dealing with the new situations that each day brings. It does capture the sensation of feeling financially secure one week, then having to tighten your belt overnight because of an unexpected bill.

The month is full of financial bonuses, such as winning the lottery, and financial pitfalls, such as extra bills or bad investments. While in Game Of Life the players can almost pinpoint the decisions that led to their financial situation, Payday emphasises the random side of financial responsibility – even when you do everything right, sometimes things happen that can either boost your savings or drain them altogether.

Charge Large

Games like Monopoly, Payday, and The Game Of Life are all useful teaching tools, but their major flaw is that they were introduced back in the 20th century, when finances were a little different for new graduates. Charge Large was designed in 2007 by two young entrepreneurs, and it was released by Hasbro in 2009, making it the most recent financial-themed board game for children. This is one of the few games out there that specifically teaches children about credit cards and the importance of building good credit. The players start out by receiving a gold credit card and must strive to upgrade to  the elusive black credit card. However, the winner must also have no debt and $2,500 in cash, which challenges players to manage credit responsibly while they navigate the board and build wealth.

Not all credit is bad; children will soon learn that they need good credit to qualify for a mortgage, to pay for a car, or just to get a good rate on a loan if they need funds to further their career. But they will also learn that bad credit can leave them in difficult positions. By playing Charge Large, children can learn that responsible credit use builds your credit rating, giving access to higher credit limits, but that racking up credit debt without saving and investing can create a financial disaster. It’s more engaging than looking up a Bankrate.com article about building good credit. The sooner they accept that a credit card is an essential tool for building credit, and to use it wisely, the better their chances for starting their adult lives with a good credit history.

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The Allowance Game

No matter how mature your children are, not all of them are old enough to be thinking about credit cards and decision-making. Their only appeal for playing Monopoly or The Game Of Life is to crush all their opponents and win the most money – they’re probably the cause of most of the feuds. To get them to really think about money as a tangible thing, instead of just a toy in a game, start them off with The Allowance Game. This is a perfect game for younger children, or those with short attention spans. The goal is smaller – only $20 – but it does get kids thinking about the value of $1. It also teaches them about budgeting, and that, although money can buy a lot of things, money eventually runs out. Most importantly, it will make them think about where they want to spend their money; is it better to spend it all in one place, or to save as much as possible?

On a more practical note, The Allowance Game teaches your children the benefits of completing their chores, and the penalties that come with forgetting to complete their assignments. As the kids play, they earn money when they land on spaces that say “mow the lawn” or “walk the dog.” It then teaches responsibility with scenarios such as “I forgot to do my homework,” which causes the player to lose a turn. It even touches slightly on unexpected bills, because they see just how quickly their hard-earned money can go when they’re forced  to spend some of it buying a gift or paying for an overdue library book. Instead of letting them play at being grown-ups, The Allowance Game teaches younger children about money in an environment that relates to them, making the lessons feel more relevant.

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Teaching kids how to handle money doesn’t have to be boring and full of complicated figures. These games are just a few examples of the wide range of educational tools out there that parents can use to simulate real life financial situations. While some games, like Puerto Rico, might feel more like a historical simulation where your children can pretend to be colonists, it still teaches them the basic concepts of setting up a business. Kids learn while they have fun, and money is definitely something they need to learn.

Getting Over Credit, Debt, And Other Horror Stories

When people think of credit and debt, their minds immediately go to the worse case scenarios of them. We’ve all heard ghost stories of how bad credit can drag you down and limit your options and how debt can become a spiral that can truly be very hard to climb out of. But the problem is that a lot of people focus on the negative consequences of these stories that they fail to consider just how helpful credit and debt can be. Here, we’re going to challenge the phobia and help you use credit and debt better.

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The sooner you come face-to-face with it, the better

There’s a significant portion of adults who have never once checked their credit report. Some of these people might not know to, others have chosen not to because they’re staying well away from credit as much as possible. However, even if your record is immaculate, your report might not be. You might have to repair your credit score by no fault of your own but because there are erroneous accounts on them. For instance, you might be getting bad reports based on accounts that are mistakenly tied to your name but aren’t yours. Or you might be up-to-date with all your payments but your creditors made a mistake in reporting that you missed a payment.

It’s the next step in a better financial life

When used responsibly, credit and debt are the steps you take to make some of the biggest financial decisions in your life. When you get a car, when you buy a house, when you start a business, the chances are you take out a loan for them. With better credit, which is built by taking debts responsibly, you have the chance to get the best discount auto loans and the best mortgages. Having no history of credit isn’t going to help you get better deals. You have no history of being a responsible debtor, after all. Only by building a healthy credit history can you get the best deals.

Credit cards aren’t the devil

Those pieces of plastic might be considered the single most dangerous aspect of credit. Yes, people get themselves into credit card debt they can’t handle by using it to make lifestyle purchases they otherwise couldn’t. But that debt can be used positively to build up your credit so long as you have pre-planned a budget to always keep on top of it. Debt management turns debt from a danger into a simple part of life. You can get rewards cards that turn credit card use into extra purchasing power, whether it’s through air miles or through grocery vouchers.

Wise use of credit and responsibility for debts can be one of the most effective financial tools at your disposal. It can improve your purchasing power and it can help you make some of the biggest financial decisions in your life. In any account, it’s important to come face-to-face with it so you make sure that it’s not marred by errors that could come back to haunt you.

Delightfully Simple Ways To Dodge Debt Your Entire Life

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Some people think that owing money in life is basically inevitable. It’s easy to understand why some individuals have this mindset because a lot of people are in debt. In fact, it’s estimated that around eight percent of the country’s population are in some form of debt right now. Not just in debt but struggling to pay it back. Don’t forget it is possible to be in debt and be able to manage it. For instance, any time you have a house with a mortgage you will be in debt to the mortgage lender. But that doesn’t mean that you’re in a debt spiral, suddenly unable to handle your finances. That said, it is entirely possible to completely avoid debt through your entire life. Just because most people experience it at some point doesn’t mean that you have to. Debt is a nightmare, and it’s time to snap out of it and wake up.

Budget Budget Budget

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There is no one living in this world right now who can afford not to live on a budget. Even the richest one percent have budgets, they just have larger expenses. In many ways, this makes a budget even more important. So, if you live in a nice house and you’re on a lovely income, you might not think that you need to budget. But that’s a mistake because eventually you’ll overspend and end up in financial trouble. When that happens, you’ll have no choice but to borrow. Immediately, your time of living without the trouble of debt will have come to an end. Budgeting is just a matter of working out how much you make, how much you spend and using the difference to buy things you want.

If You Borrow…

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Make sure that you can afford the cost of the loan. There’s no issue with borrowing per se. The only problem is if the interest rate is so high that you can’t actually afford to pay it back. Then you end up in a debt spiral. So, only take out low-interest rate loans that you’ll know you’ll be able to pay back. Again, it’s a budgeting exercise. Work out how much you need to borrow and when you’ll be able to pay it back. Use a lender like Credit24, and you’ll be able to make sure you can always pay back any money that you take out.

Credit Cards Are Bad News, Avoid Them

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Finally, we need to talk about credit cards. Credit cards are just a way to trick people into living past their means spending more than they can afford. If you want to avoid debt, you need to make sure that you never bother applying for a credit card. This probably sounds easier said than done because there are plenty of massive expenses in life. We’ve just gone through Christmas, and there are probably a lot of parents with expensive credit card bills. You don’t have to be one of them. Instead, you can save through the year and avoid buying on credit altogether. No debt, no credit bills, no problem. If you buy on credit, you’re really just cheating yourself. You can’t afford to make the purchase, and the money you’re spending isn’t actually yours.

Fascinating Facts About The Credit Card

This credit card infographic was created by Sainsbury’s Bank