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Your Personal Debt May Not Be Entirely Your Fault

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Today's lifestyles are altering your financial stability. School loans, car loans and credit cards all add up to the cost of your daily needs and wants. What if it wasn't your fault completely?

Keith Weiner, an economics expert, shares his thoughts on debt and what he believes is to blame.

Your debt could have originated from the zero interest rate policy of the Federal Reserve. According to Keith Weiner, "This policy causes decreased savings and increased borrowing, and therefore debt."

Saving: Your first instinct is to stay away from debt by saving.

When you save with zero interest you aren't growing your savings efficiently. Sacrificing money out of your paycheck each month to set aside in your savings can be discouraging if you don't see immediate results. This is because it isn't really increasing if you have zero interest. If you're not compounding interest it is impossible to make a difference in your bank account.

You may wonder what compound interest is and how it works. When you deposit money into your account, interested is added to the amount. The added interest will also earn interest, which will grow your balance at a quicker rate than if you just relied on the deposits alone. However, this also happens in a negative way when you borrow money. Continue reading for more information.

Borrow: Logic tells you when you can't afford, borrow.

You may be lured in to debt, because the cost of borrowing is so low. Unfortunately, the interest on your debt is not zero. Interest rates on credit card loans are high despite the zero interest rate for savings. Compounded interest will increase your debt each passing month. As mentioned before, the interest you acquire on your debt will create interest on your current interest and compound more debt in the long run.

If zero interest in your savings is working against you and the rising cost of lifestyle is giving you little in choices but to borrow money, you are almost forced to continue living in debt.

We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: Forbes | Debt

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