10 Causes of Debt 5-10

Causes of Debt #5 Car loans: $768 billion

 

Outstanding auto loans totaled $768 billion in the third quarter of 2012, the highest amount in nearly four years, according to the Fed. Also, auto-loan balances increased for the sixth consecutive quarter.
New auto loans rose for the third consecutive quarter, to $85.8 billion, an increase of 4.4% over the prior quarter.
The percentage of auto-loan debt that is 90 days or more delinquent was roughly steady versus the prior quarter, at about 4.2%.
The rise in auto debt, along with the stability in auto-loan delinquencies, is seen as a positive sign for the health of the overall economy.

Cause of Debt #6 Credit card debt: $674 billion

 

Credit card debt in the United States totaled $674 billion in the third quarter, up $2 billion from the second quarter, but down significantly from its peak of $866 billion in the fourth quarter of 2008.

The Federal Reserve Bank of New York also reported that there are 382 million open credit card accounts, down slightly from the second quarter.

The average credit card debt per borrower was $4,996 in the third quarter, according to the credit reporting bureau TransUnion. That is up 0.5% from the second quarter of 2011 and up 4.9% from the third quarter.

Credit card debt in 2012 followed the same pattern as the previous year, TransUnion reports, with balances declining in the first half of 2012, then increasing in the second half. That seasonal trend is also reflected in the national credit card delinquency rate (the ratio of borrowers with payments 90 days or more past due), which increased from 0.63% in the second quarter to 0.75% in the third.

 

Cause of Debt #7 Home equity loans: $573 billion

 

During the height of the real-estate bubble, Americans relied on the equity in their homes to support their lifestyles in the face of falling or stagnant wages. The viability of that approach evaporated in the wake of the financial meltdown that occurred in late 2007, but home equity lines of credit have remained a significant source of personal debt for U.S. consumers.
On the plus side, that exposure has mainly declined since 2008.
Balances on home equity lines of credit dropped by $16 billion, or 2.7%, to $573 billion in the second quarter of 2012, the Fed reports. The delinquency rate (90 days or more) for such lines of credit has remained steady at 4.9%, as of Sept. 30, 2012, the Fed states.

Causes of Debt #8 Medical debt: Estimated to be hundreds of millions of dollars

 

Not all credit card debt involves discretionary purchases. Many Americans use their cards to pay for medical expenses not covered by health insurance. Reliable figures for what Americans collectively owe in health care debt are not available, but recent surveys suggest it's a big problem.
According to the Commonwealth Fund, a nonprofit health care research foundation, 24% of Americans ages 19 to 64 have medical debt they are paying off; 25% of them owed $4,000 or more.
A survey by the research and advocacy group Demos found that 62% of low- and middle-income households with credit card debt reported that medical expenses contributed to what they owed, adding an average of $1,679 to their balances. And 30% of the households surveyed had medical debt, averaging $6,476, that's not on their credit cards.
Amy Traub, a senior policy analyst at Demos, says about 62% of personal bankruptcies in the United States in 2007 were linked to medical bills or illness, and past-due medical bills make up 52% of accounts reported by collection agencies.

Cause of Debt #9 Gambling debt: Estimated to be hundreds of millions of dollars

 

One particularly toxic kind of debt that frequently ends up on credit card balances stems from the losses racked up by problem gamblers.
Here, too, hard data is lacking, but new casinos and the availability of online gambling sites appear to be giving people more ways to get in real financial trouble.
The National Council on Problem Gambling estimates that about 2 million Americans in any given year could be considered pathological gamblers, and an additional 4 million to 6 million could be considered problem gamblers.
Those with gambling problems can rack up serious debts. Gamblers seeking help from Nebraska's Department of Health and Human Services reported an average debt of $28,158, the department reported in 2011. If that level of debt were shared by half of the pathological or problem gamblers in country, it would amount to between $84.5 million and $112.7 million in total gambling debt.

Causes of Debt #10 Personal business and farm loans: Several hundred billion dollars

 

One form of debt that is generally considered positive is the kind taken on by people who are starting or expanding business.
So, it can be considered good news that the U.S. Small Business Administration's loan programs posted their second-largest dollar volume ever in the 2012 fiscal year, which ended on Sept. 30. The agency's loans for the year totaled $30.25 billion, which works out to about $97 per American, and the SBA says the growing pace of its loans is a positive sign for the economy.
Agriculture remains an important part of the economy, too, and farm loans (which, like small business loans, are typically made to individuals rather than corporations) represent another arguably positive form of personal debt.
As of year-end 2011, the U.S. banking industry had extended nearly $130 billion in farm loans, according to the American Bankers Association's latest Farm Bank Performance Report.  You have to understand that when you start a small business you have to budget yourself and make sure you have a serious plan on how you are going to profit in this business.  Information gathered from (MSN Money)


Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free.We are offering Dave's "The Total Money Makeover" for free to anyone that joins our team and start their journey to being debt free.Click the link below and see what we have to offer.
Click to see how to get the "Total Money Makeover" for free

6 Stages of Facebook Envy by Dave Ramsey

6 Stages of Facebook Envy

Facebook envy.
There aren’t any forms of positive envy, but Facebook envy might be the worst.
What is it? As we explained in our article earlier this year , Facebook envy happens when you see a “friend” post about a vacation, a restaurant or a new car—anything that you can’t have—and you immediately feel inadequate because you don’t have those things.
Maybe you’re trying to get out of debt, or maybe you’ve recently lost a job and had to cut way back on spending. You’re in a tight spot.
Meanwhile, most of your friends are walking the credit card wire. They might fall any day now, but they’re going to look good on the way down! They love to show off every part of their extravagant, seemingly carefree lifestyle.
So how do you know if you suffer from Facebook envy? Let’s walk through all the stages using an example.

Let’s say your friends Mike and Sally recently bought a brand-new, two-story, four-bedroom house just outside the city. It’s the perfect house—the house you’ve always wanted.
Three hours after closing on their house, Sally posts this Facebook status:
“We are so blessed! Mike and I just bought our dream house! We can’t wait to start our family, grow old together, and live the life we’ve always dreamed of in this perfect home! We are so blessed! I love this house, and I love you, Mike! We are so blessed!”
Of course, the status update isn’t enough. Sally also posts a photo, and, no surprise, the house is beautiful.
For you, the process of Facebook envy now begins.

1) You see the status update. Wow, that’s a beautiful house, you think. I’ve always wanted a house like that, you think. Mike and Sally, they’re such a cute couple. They seem to have everything.

2. You compare. This is where Facebook envy really starts. You compare your little studio apartment to their 3,000-square-foot, four-bedroom home. While looking at the photos, you realize your bedroom would likely fit inside their master bedroom closet.

3. You feel inadequate. Look at their house, and here you are living in this tiny apartment. You begin to feel sad and depressed because you thought you and your wife would have your own place by now. But some bad financial decisions have set you back and delayed your first home purchase. And there are Mike and Sally, living the life and rubbing it in on Facebook.

4. You consider making a change. You’re now inspired, but not in a good way. Before, you wanted to get out of debt, and you were willing to do whatever it took to reach that goal. Now you’re considering abandoning that plan. You’re inspired to keep up with the Joneses—or, in this case, Mike and Sally. You hop on a real estate website and start looking at comps. Right now, you could probably only make a 5% down payment—nowhere near your 20% goal—but you’ve got to have a new house because you want to make your own Facebook post!

5. You start taking active steps to make that change. You call a real estate agent. You visit a couple of open houses. You meet with a mortgage lender and look at some “creative” (in other words, terrible) loan options that will keep you in debt for 30 years. You are in full-on Facebook envy mode now. You’re considering changing all your plans, and your entire future, over a case of Facebook envy.

6. You (hopefully) realize you’re about to make a bad decision. Finally, you hear a voice, maybe Dave Ramsey’s, say, “What are you doing?” You snap out of it. You realize this has all been one terrible case of Facebook envy, and you back off your crazy change of plans. Or you move forward and make a terrible decision that will cause major regret a year from now.

Now, this is an extreme example to make a point.
You might not get Facebook envy over a house. For you, it could be your friend’s food pictures, their vacations, all their group photos or even their always-smiling faces.
So how do you curb Facebook envy?
Simply realize that no amount of stuff will bring you happiness. Understand that, if your Facebook friends are like most Americans, a lot of their glamorous, showy lifestyle is thanks to debt.
You’ve chosen to avoid debt, right? So, one day, you can have the house and the vacation—and, most importantly, the legacy for your family—without mortgaging your future.
So if you have an out-of-control case of Facebook envy, maybe it’s time to take a break from social media. Let your “friends” all show off the stupid decisions they make with money, while you stay above it all. You’ll be much better off that way.
Have you ever had a case of Facebook envy?

Many of us buy things because we want to be like the Joneses.  Well I will like to thank Dave Ramsey for this article.  You may have read it or you may not but I felt you needed to read this and understand that you are you and they are them.

Here is a tool to help you get out of debt faster.
 

10 Causes of Debt #4: Student Loans

Student loans: $914 billion

Outstanding student loan debt stood at $914 billion as of June 30, 2012, according to the latest quarterly report on household debt and credit by the New York Fed.
While most other forms of household debt have been on the decline, debt related to education has increased by $303 billion since household debt peaked in the third quarter of 2008. (Other forms of debt have declined by a combined $1.6 trillion since then.) In fact, student loan debt was $10 billion higher in the second quarter of 2012 than in the first, and delinquency rates also increased.
The percent of student loan balances 90 or more days delinquent increased to 8.9%, up from 8.7% during the prior quarter.
The rising cost of education is likely to blame. The Institute for College Access & Success, an advocacy group, says the average student debt rose to $26,600 for the class of 2011, up from $25,250 in 2010.

Dave Ramsey Giveaway

Many of these lessons are taught by Dave Ramsey in his best selling book “The Total Money Makeover”. These lessons in this book will teach you how to be prepared.

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything. Recognize the 10 most dangerous money myths (these will kill you). Secure a big, fat nest egg for emergencies and retirement!” These are just some of the things you will learn in this book. It has changed the lives of millions including myself.

I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free. We are offering this book for free to anyone that joins our team and start their journey to being debt free. Click the link below and see what we have to offer.

http://www.1-2-3-bedebtfree.com/

 

10 Causes of Debt #3 Payday Loans

Payday loans: $38.5 billion

 

If you're living paycheck to paycheck, an unexpected expense -- such as a car that needs urgent repairs -- can be a real problem.
Payday advance loans offer a solution of sorts, offering small loans that borrowers pay back when they get their next paychecks. You pay a flat fee of about $15 to borrow the money, which you pay back when you get your next paycheck.
At any given time about $38.5 billion is loaned out this way, according to the Commercial Financial Services Association of America, the trade group that represents such lenders.
The borrowers are about 19 million households that are experiencing short-term cash-flow shortfalls, the group says. That amounts to about $2,026 per borrowing household.
Skeptics say the loans come at a high price. New York state, which does not allow payday advance loans, says on its banking department website that the short durations of such loans often means that borrowers have to extend them, racking up additional costs. The banking department adds that the interest rates on such loans can amount to 400% or more per year.
www.money.msn.com

Dave Ramsey Giveaway

Many of these lessons are taught by Dave Ramsey in his best selling book “The Total Money Makeover”.  These lessons in this book will teach you how to be prepared.

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything.  Recognize the 10 most dangerous money myths (these will kill you).  Secure a big, fat nest egg for emergencies and retirement!”  These are just some of the things you will learn in this book.  It has changed the lives of millions including myself.

I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free.  We are offering this book for free to anyone that joins our team and start their journey to being debt free.  Click the link below and see what we have to offer.

http://www.1-2-3-bedebtfree.com/

10 Causes of Debt/Reason Number 2

#2 Divorce

 

It is not a glorious thing when a couple gets a divorce.  If there are children involved it can be a pain to them just the same.  There are many things that go into a divorce financially.

When you get divorced there are things that can put you under very fast.  Whoever gets the house has to worry about the mortgage, repairs, bills, and property tax just to name a few.  Whichever partner is not rewarded the children has to worry about survival while paying child support.  It also causes them money to spend time with their children as the custodial parent will see them more and spend more time with them doing things that will not cost as much.

One major thing is that you both will have to split all the debt that you have accumulated over the years.  Credit cards, car notes, and any loans you may have taken out.  Factors that weigh heavily on the pockets. 

One way to avoid this to make it easier on the both of you is to have a plan that you both can agree on.  This plan should include each person’s financial situation.  Face it one most likely makes more than the other.  Just because you are divorcing does not mean you have to neglect your former spouse’s needs financially.  Think of the hate that would cause between the two of you and the affects it would have on the children.   If both of you are willing to make sacrifices and have a clean break from all financial ties (with no debt) together this is very important for you to do.

Instead of keeping the house you both may decide to sell it.  This is the most common thing done in divorces.  This way the mortgage is not an issue.  If you can’t afford to keep the car then you will need to sell it and buy a cheaper car.  Your income is not the same as it was when you were married so you can’t continue to live on the budget you may have come accustomed too.

Set a budget for yourself and remember to live within your means and not try to be glorious or go on a spending spree because you are single and you need that new outfit to go out on the town with your friends.  Once you realize how tough things are going to be on a single income the better off you will be.  Build your savings and your emergency fund up and start to do the Baby Steps listed in the “Total Money Makeover” by Dave Ramsey.

Dave Ramsey Giveaway

 

Many of these lessons are taught by Dave Ramsey in his best-selling book “The Total Money Makeover”.  These lessons in this book will teach you how to be prepared.

 

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything.  Recognize the 10 most dangerous money myths (these will kill you).  Secure a big, fat nest egg for emergencies and retirement!”  These are just some of the things you will learn in this book.  It has changed the lives of millions including myself.

 

About the Author:

Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free as well as provide you with an engine to make extra money without leaving your primary job.  We are offering this book for free (The Total Money Makeover) to anyone that joins our team and start their journey to being debt free.  Get Your Free Dave Ramsey Book.

See Testimonies and other offers here:

http://www.1-2-3-bedebtfree.com

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10 Causes of Debt

10 Causes of Debt

Cause #1: Reduced Income But Same Expenses

How do we get into debt?  There are 10 Causes of Debt in which I will discuss throughout this Debt campaign.  We as people tend to do so many things to get us into debt and the majority of the things we do, we don’t even realize that we are doing them.  Some things we have control over and some things we don’t.  The lesson to be learned is to control things we can and to be prepared for the things we have no control over.  Over the next ten newsletters I will discuss them one by one so you can get a good idea on how to combat debt in your lives and your family’s lives.

 

First Cause of Debt: Reduce Income but Same Expenses

There are many circumstances in life where we lose some or all of our income.  May it be getting laid off from work, illness, paycuts, or having to take a less paying job.  These are things you have no control over, but when these things happen we have to adjust our lifestyle.  We can no longer drive the most expensive car or live in the most expensive house.  It is hard for people to let these things go and it is totally understandable.  We get accustomed to the good things when we have worked so hard to get them.  This is the hardest thing to do when it comes to adjusting to a reduced income lifestyle.

The first thing that needs to be done is to take into account all the things that are extras.  What I mean by extras is those things that you can live without and are not critical to living.  Some of things may be to sell your car for a less expensive one.  If you can no longer afford cable or the big cell phone bill (which many of us have) and find a lower plan that will fit your budget.  Cut back recreational activities.  Now we all understand that we have to be able to enjoy life, but maybe instead of every weekend maybe just once a month.  Find less expensive things you can do at home with your children or go to your local government’s websites and find out what recreational activities they have for free.  Many cities post these on their websites so take full advantage of that.

Once you cut back on many of the things you can live without and are not critical for your survival, then it’s time to take a look at your finances again.  Hopefully by then you have adjusted enough and your mortgage or your rent is not over shadowing you like the Creature Within.  All things are possible as long as you have a plan.

Dave Ramsey Giveaway

Many of these lessons are taught by Dave Ramsey in his best selling book “The Total Money Makeover”.  These lessons in this book will teach you how to be prepared.

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything.  Recognize the 10 most dangerous money myths (these will kill you).  Secure a big, fat nest egg for emergencies and retirement!”  These are just some of the things you will learn in this book.  It has changed the lives of millions including myself.

 

About the Author:

Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free as well as provide you with an engine to make extra money without leaving your primary job.  We are offering this book for free (The Total Money Makeover) to anyone that joins our team and start their journey to being debt free.  Click the link below and see what we have to offer.

http://www.1-2-3-bedebtfree.com/

Like My Facebook Fan Page: http://www.facebook.com/9to5assassins

 

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