Are you ready for some Halloween horror stories? Forget Freddy Krueger, Jason Voorhees, or Michael Myers – we've got something really scary for you. Those three famous horror movie characters can't compete with these three real-life financial horrors.
The Debt's Coming from Inside the House! Get Out Now! – America's national debt has topped a staggering $21.6 trillion – but your main concern is your own household debt. Unfortunately, America's household finances aren't in much better shape.
According to the New York Federal Reserve's Q2 2018 Household Debt and Credit Report, aggregate household debt is $13.29 trillion – the highest collective debt ever. Household debt has been rising for the last sixteen quarters. Outstanding student loans alone have topped $1.5 trillion. Revolving debt – mostly credit card debt – hit $1.03 trillion.
Out-of-control spending can crush your finances. To prevent spending binges, make a realistic budget and stick to it. If you're attempting to reduce existing debt, budgeting is even more important – you must have a surplus at the end of the month to pay down debt. If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.
Sinking In Interest Charges – Beware the interest rates that eat your income. They sneak up on you, waiting until you're ready to buy a home or put extra charges on your credit card – and then they attack. Your income is slowly consumed by interest charges, leaving you nothing to live on. If only you had kept your credit score high...
The fiends at the Federal Reserve have been slowly piling on 0.25% rate hikes – three in 2017 and three in 2018 to reach 2%-2.25% with one more hike expected before the year is out. They plan to raise rates three more times in 2019. Each rate hike eventually gets passed on to you. Can you keep your head above water, or will higher rates push you under?
Fight off increasing interest rates by paying off all bills on time and controlling your spending. Never charge more than you can afford to pay off each month. You won't have to worry about credit card interest if you don't carry a balance – and your higher credit will qualify for better loan/mortgage rates.
The Incredible Shrinking Credit Score – Who could be at the door this Halloween? Surprise, it's you – or an identity thief pretending to be you, buying a hundred smartphones with a fraudulent account or twenty laptop computers on your MasterCard. If you don't check your credit report regularly, you may not see the danger until it shows up as overdue bills and a ruined credit score. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
A 2018 Harris Poll survey found that nearly sixty million Americans have been affected by some form of identity theft – around 18% of the U.S. population. According to Javelin Strategy & Research, approximately 16.7 million individuals were identity theft victims in 2017 alone, with an average loss of just over $1,000.
Whether they're fraud alerts, credit freezes, or credit monitoring services, find a protection strategy that works for you – and use common sense protections like strong passwords, anti-virus software, and shredding of documents before disposal.
You may not see any trick-or-treaters dressed as identity thieves or high interest rates (if you do, please give them extra treats for imagination). However, those financial monsters are scary because they're real – and they cause real financial damage.
Take preventative action and you can avoid these horrors, or at least minimize them. Don't be the financial equivalent of horror movie teens that wander out into the woods alone at night looking for their missing friends. You know how that works out for them.