National Guard Family Program
Soldier with child riding piggyback Introduction to Personal Finance
An Overview for State Family Program Directors, Wing Family Program Coordinators, and Families.
 

Introduction

Evaluating Your Situation

Budgeting & Debt Management

Goals & Plans

Insurance & Disability Planning

Investment Planning

Education Planning

Retirement Planning

Estate Planning

 

 

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BUDGETING AND DEBT MANAGEMENT

 

2.

Introduction

 

2.1

Why Do We Acquire Debt?

2.2

Debt Can Become a Habit

2.3

The Reality of Borrowing

2.4

The Credit Trap

  

2.4.1

Fees

2.4.2

Rates

2.4.3

Types of interest

2.5

Eliminate and Avoid Debt

2.6

Trimming Your Budget

2.7

Learning Check

 

2.1 Why Do We Acquire Debt?

The inability to defer gratification may be the single most significant cause of financial failure!

Debt is paying, over time, for a benefit already received. In some cases, acquiring debt is a realistic way of satisfying our needs.

Let’s look at some examples of practical reasons for debt:

  1. Having our own home provides a feeling of security and belonging to the community. It can take a lifetime of earnings to pay for a home, so a mortgage is a practical method for satisfying this need.
  2. In our mobile society, transportation is an essential. We need transportation to work before we can earn income. Again, short-term borrowing may become the practical solution.
  3. A good education is required for maximizing our earning potential. To get that education, the cost of borrowing may be an investment in the future.
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