Friday, February 4, 2011

Avoiding The Debt Trap

I presented a seminar called "Avoiding the Debt Trap" at the Rocky Public Library on Thursday, Feb 3.  I have included some of the highlights and a link to the slide show that I used (500 kb).

Avoiding The Debt Trap

Debt is an obligation to pay for money/services given out, often at an additional cost of interest

When do debt problems start?
  • Usually when spending more on wants than needs
  • Spending more than is taken home
  • Put extras on credit cards and don’t pay them off

Controlling Your Wants
  • Write down what you need and their costs - Mortgage, rent, insurance, food, medicine
  • Write down what you want and their costs - Cable, phone, movies, meals, vacations
  • Look at take home income, figure what fits - Needs come first, wants can be postponed and may even change with time
Common Bad Debt
  • Vehicle (truck or car)
  • Quad & snowmobile
  • RV, motor home
  • Vacation
  • Sports
  • Entertainment (movies, bar, TV)
  • All things that while enjoyable, but add no money to savings, no value. They cost money, but there are no monetary returns.
Choices - Avoiding debt or getting out of debt is about choices
  • Choosing needs over wants
  • Choosing long-term over short-term
  • Choosing to control your lifestyle and its costs vs. your lifestyle

For full details from the presentation, please go to the slide show pdf (500 kb).  Any comments or questions, please post them and I'll get back to you as soon as I can.  Jerry
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3 comments:

  1. AnonymousFebruary 6, 2011 at 6:37 PM

    This is a hard lesson to teach my children and grandchildren. They seem to think that they will always be able to afford all the luxuries, which is not how I lived my life. I think their friends have been strong, poor influences on them regarding their budget skills. Some of them are having worse problems than others, but they are all going through budget problems that a little forethought would have prevented. I hope your class helped everyone who attended.

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  2. Concerned ParentFebruary 13, 2011 at 7:16 AM

    Looks like a good class. Maybe it should be taught in High School?

    ReplyDelete
  3. Rocky CUMarch 1, 2011 at 8:37 AM

    Dear Concerned Parent, Thank you for the support. Rocky Credit Union does go into the schools that invite us to teach a budget class in grade 10 for the CALM class. It would be nice to be able to do it for grade 12's in about March, as the information would be very relevant, but we will take any opportunity we can get to help further our youth's financial education. Jerry

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