10 Greatest Myths about Credit and Debt

Myth 1: I'm a loser and a failure because I'm in financial trouble.
Reality: You have to accept responsibility for your actions and remember that you did accept the credit with the promise of paying it back. But most families and our schools do a poor job of teaching financial responsibility. How many classes did you take while growing up that taught you how much credit you should accept? Maybe the truth is that you made a mistake and got in over your head because you didn't know better. If you can learn from this mistake, you are neither a loser nor a failure. Accept your setback, learn from it, and move on.

Myth 2: My financial condition is so bad that my situation is hopeless.
Reality: Although your problem may not be solved in a way that you would envision, a resolution can always be found. Open your mind and be realistic about your options. Ultimately, you have to choose a solution you are most comfortable with.

Myth 3: The credit card companies wouldn't send me applications in the mail if I couldn't afford it.
Reality: Wrong. The credit card companies are simply making you an offer based on mailing lists or research they have performed. It is your responsibility to determine whether you can afford to accept their offer.

Myth 4: Everything is okay because I pay the minimum payment due each month.
Reality: By just paying the minimum payment on a debt, you extend your payments for many years. If possible, send more than the minimum payment. If that isn't possible, you are probably living close to the financial edge. What would happen if you were injured or sick or could not work? Simply being able to live from paycheck to paycheck is not a sign of financial well-being.

Myth 5: If my debts get to be too much, I'll just file for bankruptcy. Reality: Bankruptcy is a very serious matter and should be a last resort, not an easy out. It is a legal case filed with the bankruptcy court that is a matter of public record, and it can be reported for the rest of your life if you apply for certain loans, life insurance or jobs. Many people who have filed bankruptcy wish they had tried other alternatives before filing. Once you file, you will always be ''a person who filed bankruptcy,'' and you can never take that back.

Article continued at http://www.ivillage.com/money/life_stage/deepdebt/articles/0,,191957_201068,00.html

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