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12 Debt Traps and How to Avoid Them

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Learn how to avoid these 12 common debt traps

Most people have learned and understand the basics behind building wealth: earn more than you spend, avoid debt, and invest.

Learn these 12 common debt traps and how to avoid them

Most people have learned and understand the basics behind building wealth: earn more than you spend, avoid debt, and invest. 

However, many people either haven’t been taught or don’t recognize the common debt traps companies employ and once you’ve fallen into a debt trap, you quickly become a slave to the lender. 

To help you avoid these common debt traps, I’ve listed them below along with some guidance on how to recognize and avoid them.

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How to Make Better Personal Finance Decisions

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How to Make Better Personal Finance Decisions

To get ahead in your personal finances, you need to learn how to make better personal finance decisions. The key to making better financial decisions is to be intentional with each decision you make. You need to understand your entire financial picture and understand how each decision you make influences your current finances as well as your future financial goals.

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What is the Ideal Debt to Income Ratio?

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What is the Ideal Debt to Income Ratio?

There are many different metrics you can use to determine how well you’re doing financially. One of the most effective for determining credit worthiness (and most commonly used by lending agencies) is the debt to income ratio or DTI ratio.

In a perfect world, the ideal debt to income ratio would be 0% (absolutely no debt).

However, for most of us, that’s not realistic as there are large expenses that we couldn’t fund in a reasonable amount of time without the use of credit. These include mortgages, small business loans, etc.

Just because we have access to credit and need it (arguably) for large purchases, you shouldn’t abuse it. Checking a few key metrics like your net worth and debt to income ratio can give you a quick snapshot of how you’re doing handling credit.

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What Percentage of Income Should Go To Housing?

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What Percentage of Income Should go to Housing?

When renting or buying a house, it’s important to know what percentage of income should go to housing because it’s often your largest monthly expense.

There is no one-size-fits-all rule for every situation, but there are some general rules of thumb to help guide you when making the decision.

However, to truly know what percentage of income should go to housing, you need to examine your current financial picture, what your financial goals are, and what options you have available to you for housing.

Once you have this information, you’ll be able to clearly see what percentage of income you should spend on rent.

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What Percentage of Income Should Go To Rent?

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What Percentage of Income Should go to Rent?

When renting your first apartment or house, it’s important to know what percentage of income should go to rent. Each person’s situation is a little different, so there will be a different answer for everyone.

To start, you’ll need to examine your current financial picture, what your financial goals are, and what options you have available to you for rentals.

Once you have this information, you’ll be able to clearly see what percentage of income you should spend on rent.

What Percentage of Income Should Go To Rent? Read More »