Budgeting and Debt Management

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

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

2.2 Debt Can Become a Habit

If not controlled, incurring debt can become a habit.

Purchasing items on credit without considering the consequences is dangerous.

The American way is laced with conspicuous consumption. We are bombarded with advertising and an endless variety of consumer goods. How can we buy? Easy credit! There are endless reasons to go into debt, but before you leap, carefully consider the reasons you are borrowing. Ask yourself:

Is it necessary?
Do the benefits justify the cost?
Is it truly an investment?
Will it increase in value to justify the cost of borrowing?

"A man in debt is so far a slave." - Ralph Waldo Emerson