Everyone loves a good comeback story- exceeept when it’s the villain who is making the comeback! That’s basically how we feel about the mullet. We can all pretty much agree that mullets are the most villainous hairstyle. It had its heyday back in the 80s and is now back in full-business-in-the-front-party-in-the-back-force. Similarly, that’s how we feel about consumer debt. Credit card debt levels drastically dropped with the onset of Covid lockdowns and for a minute we thought this might be the start of a personal finance reawakening! But unfortunately that was the exception rather than the norm. In February, American consumers increased their borrowing by a record $42 billion as credit card usage was up 20% in Q1 alone according to the major credit card companies. This is bad news of course, but there are strategic ways to use debt to your advantage. The types of debt you sign up for, what you’re spending it on, your debt to income ratio, and resisting the ‘immediacy premium’ are all elements of debt that we discuss today.
Additional links:
- And you thought debt was only bad for your finances- it’s bad for your body and your brain!
- Use Undebt.it to help you figure out a get-outta-debt plan and listen back to episode 297 where we talked about the debt snowball vs the debt avalanche.
- We talked about responsible credit card usage which is what we recommend- also, see what credit cards we use to maximize those benefits!
- Be careful, too much good debt can also be bad for you. The key is conservative and strategic leverage!
- Stay out of debt with these mindful spending tips!
- For help with overwhelming debt, check out free services offered by the NFCC (National Foundation for Credit Counseling) and Money Management International.
- One way to figure out if you have too much debt in your life is to figure out your personal debt to income ratio. Traditional lenders won’t consider you if you’re above 43% but hopefully you’re sitting way below that… right?!
- Credit Card Tool – Looking for the right credit card for you? Then check out our new credit card tool that’ll help you to easily filter through all the cards based on your preferred airline, whether or not they have an annual fee, or simply by the cash back offer! Just toggle the sliders and you’ll know which card to consider.
During this episode we enjoyed a Moderne Dansk by Jester King! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
Best friends out!
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