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Seven Deadly Debts

While the very act of borrowing money can be a risky business in and of itself, not all debt is created equal. Certain credit decisions – which we call debt traps – are more likely to lead to a downward spiral of indebtedness than others. The good news is that most borrowing mistakes are preventable, and having an understanding of them will help you get closer to living debt-free. Here are seven of the most common debt traps people fall into – and how to avoid them. Overspending on a New Home Most financial advisers suggest spending less than 30 percent of your gross income on housing expenses. When buying a new home, putting 20 percent down is a good way to avoid paying private mortgage insurance (PMI). And don’t forget to factor in closing fees, real estate taxes, homeowners insurance, and the cost of decorating and remodeling. If you…