John J. Bowman Jr Accountant, John J. Bowman Jr. Accountant, personal finance

4 Reasons People Accumulate Debt

22 trillion. That’s how many dollars the United States of America owes to world powers such as China. Debt can be a worrisome four-letter word, not just for the country as a whole, but for its independent cogs and gears as well. While the average American doesn’t owe $22 trillion of their own cash, debt is still a reality for many. Below are four ways debt can accumulate. Do you recognize any of these in your own life?

Credit cards

Plastic beats paper in the world of transactions; over the past several years, cash payments have increasingly given way to credit and debit card charges. And, while 90 percent of consumers still use cash for some purchases, the age of credit card swiping and chip reading draws closer. However, credit cards make it easier for consumers to purchase items, sans the lighter wallet. Credit card debt has steadily risen over the past five years, and it can be easy to fall down a rabbit hole of debt if paying by card is your preferred method of shopping.

Poor spending habits

We’ve all splurged on a snack at the grocery store or a newly-released book. While the occasional treat is fine, purchasing a treat every day is a red flag. Poor spending habits are easy to fall into and difficult to climb out of, particularly if you aren’t the only member of the household struggling to save. Taking time to learn how to manage money is vital for anyone who wants to avoid falling into debt. In fact, creating a personal spending rulebook can help you and your household members understand the impulses behind your spending and ways to avoid personal debt.

Gambling

Any casino from NYC to Vegas employs psychological and mathematical tactics to take your money. From the absence of windows and clocks to lengthy slot machine algorithms, casinos are practically vacuums for your wallet. Gambling disorder is officially recognized by the DSM-5 as a psychiatric concern, and the impact it has on one’s money is no joke. Avoiding the casino is a sure-fire way to not waste your money, and there are plenty of free ways to have fun.

Loans

From student loans to mortgages, this type of debt is often the least controllable. While one can practice appropriate spending and avoid gambling or credit card usage, loans are often necessary to move forward in life. In this case, the best strategy is to stay on top of the debt and follow a strict regime for saving up to pay them off.

This article was originally published at JBowmanAccountant.info.

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John J. Bowman Jr. Accountant, personal finance, Uncategorized

What To Know About Financing A Car

One of the first large purchases a person typically makes is a car. Although the process can seem a bit daunting, it is far less complicated than it seems. Once you have a basic understanding of what financing a car means, you will be far more capable of choosing the right option for you.

To get started, take a look at what financing a car means: put simply, you want to be a car, but you don’t have the money to pay for it in full. So instead, you finance the vehicle or pay the car off over time with either a loan or a lease. The most important thing to understand about financing is that along with the loan or lease comes interest rates, fees, and other costs, so although financing happens more often than not, it is more expensive to do so than to purchase the car outright.

Once you have determined that financing a car is your best option, it is time to look at whether you want to finance through a loan or a lease.

Loan v. Lease

There is a distinct difference between loaning and leasing: when you are financing a car with a loan, you are paying to own the vehicle, whereas if you are financing a car with a lease, you’re paying to use the car, not to own.

Financing a car through a loan consists of 3 factors: the loan amount, the annual percentage rate (APR) and the length of the loan. Use a calculator like THIS one to determine how various loan amounts, APRs and loan periods will affect your monthly payment. Other essential components to remember:

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