Gail MarksJarvis: Card debt still choking low, middle incomes
News from Sacramento Bee:

Americans have been successful at getting some of their debts off their backs, but many still have a long way to go.

Low- and middle-income people are finding an escape difficult as they pay interest on top of interest. Forty percent have turned to their credit cards to cover basic living expenses such as rent, mortgage bills, groceries and utilities, according to a national survey by think tank Demos. Those surveyed were low- and middle-income people who carried a balance on their credit cards for at least three months.

Credit cards have been a safety net as people have lost jobs since 2008 and faced the pressure of high gas prices, said Amy Traub, senior policy analyst for Demos.

The 2008 financial crisis was a brutal wake-up call for many, as banks abruptly shut down cards and cut debt limits at the same time companies were tossing millions out of work. About 39 percent of households surveyed by Demos experienced some cuts in their credit, and about half of those reduced spending as a result. But 28 percent have taken on more debt in the past year.

Now, the average debt on cards held by low- and middle-income people is $ 7,145, compared with $ 9,887 in 2008, according to the survey. Fifty-one percent said cost-of-living expenses contributed most to their current card debt.

Some bought dubious debt-protection products…………… continues on Sacramento Bee

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Big debt mistakes and how to avoid them
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Our four Generations columnists. Source: Supplied

WHAT are the big mistakes people make when it comes to paying off their debts?

Gen Ys – Justine Davies

SO MANY potential mistakes, so little column space. I’ll focus on the ones that I think are the biggest, though.

So first, a huge mistake is to simply accept debt as part of your lifestyle. I’m not talking about your mortgage or investment loans. I’m talking about your consumer debt.

Credit cards, for example, on which we currently owe about $ 50 billion.

Making minimum repayments on a $ 5000 credit card debt at average interest rates could cost you more than $ 30,000 before you get around to paying it off. It is so not worth it. Use a debit card instead.

Another big mistake is paying your debts off in the wrong order. I have had clients who were focused on paying extra on to their 7 per cent mortgage while ignoring their credit card debt that was accruing interest at a rate of 20 per cent. Or paying off their tax-deductible investment loan instead of their own mortgage. And others determined to pay off their HEC…………… continues on

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