Consumer spending is on the rise as a result to America’s recovering economy, yet people forget what got them into debt in the first place – increasing credit card debt.
According to MassMutual’s State of the Hispanic American Family study, among Hispanics’ top financial goals, nearly half prioritize getting out of credit card debt as a top priority – significantly greater than the general population (29 percent). The average amount of credit card debt held by Hispanics is 20 percent higher than the general population ($15,573 vs. $12,553). Besides getting out of credit card debt and paying off the mortgage, Hispanic families are more concerned than the general population with making sure that their families will be taken care of financially if they become disabled (36 percent) or pass away prematurely (35 percent).
Whether just graduated from college, mid-career, or thinking about retirement, now is a good time to be thinking of ways to improve your personal finances. It’s important to look toward the future and build a legacy of prosperity. Learn to kick the bad habits to the curb and look toward a brighter future. MassMutual maps out a way to steer clear from credit card debt:
Don’t buy a $1,000 pizza
Look at what you’re buying and why. You may think you spent $40 when you charged a couple of pies from your local pizzeria, but if it takes you five years to pay off the debt, your pizza actually cost you $1,000. Charges for items you would never want to pay interest on should be flagged.
The Fixes
Make a list of what you owe monthly per card and the card’s annual percentage rate (APR). Have a specific goal in mind for cutting debt like “I want to pay $50 per month per card over the minimum” or “I want to cut total monthly payments by $200.” Meanwhile pay off the credit cards that have the highest interest rates or are the most tempting such as department store or electronic chain-specific cards.
Get Your Free Credit Score
The Fair Credit Reporting Act (FCRA) requires the three biggest credit-reporting agencies – Experian, TransUnion and Equifax – provide consumers with a free credit report annually. To get yours, visit the central website the three agencies set up: AnnualCreditReport.com.
Prevention
Planning for bad times and unexpected expenses in the present is a key part of avoiding credit card debt problems in the future. Experts agree that everyone should have an emergency fund. That way if you get into trouble again, it’s better to cash out that fund than to add to your credit card debt. Without preparation, these developments often lead people to turn to their credit cards and subsequently get burdened with overwhelming credit card debt again.
If you have a family or people who depend on you and your financial well-being, life insurance is also something to consider. Aside from the protection life insurance offers some types can offer a source of funds in the future, albeit with some negative consequences in certain circumstances. Making such moves now may help you handle future expenses that would otherwise push you into a credit card crunch. For more information, visit MassMutual.com/Latino.
