How to Become Rich: 13 Proven + 12 Not Recommended Ways to Get Rich

Like everyone, you too want to become rich. But you don’t have any clear idea about how to get rich quick & fast. You have already seen a lot of ‘get rich scheme’ on internet but have never succeeded at any of those

• So hat exactly do you have to do?
• Will there be any magic that will get you rich?
• Is bad luck s stopping you from becoming rich?

No, its not.
There is only one thing which you need to become rich.
And that is your STRONG DESIRE.
So, if you have a burning desire, I can show you some proven ways to get rich. There are nine solid ways to become rich & most of the people in this world who became rich used one of these.
Exceptions

• People who are born rich – This is beyond your control.
• People use illegal way  – I will discuss some of these ways but do not recommend any of these.

13 Proven Ways to Become Rich

Here I am going to show you the most proven 13 ways to become rich. Remember, there are no shortcuts to success. So, to make lots of money, you must work smart & hard with strong desire.
So find here the ways-

1. Internet Marketing

This is one of my favorite ways to become rich. If people ask me only one & the best way to become rich then I recommend Internet marketing only. Millions of people around the world have become rich through Internet marketing over the last 15 years.
There is no better time than this for a smart & hard worker to use Internet marketing to get rich quickly. There are number of ways provided below-

i) Make Money Online Program
There are hundreds of ways to make money online. You can find all these ways here.  We also provide free training material for each & every method once you sign up.
ii) Sell your own product
This is another method, I will recommend to get rich fast.  Either, you can create your own website to sell your products or become a seller on sites like Amazon, eBay etc. & sell your product.
iii) Blogging & Affiliate Marketing
Blogging is one of the highly recommended ways to become rich. You just create a blog, write your experiences, opinions, ideas etc. and share with the world.
Then promote it through digital marketing techniques, get the traffic and make huge money. You can earn either by placing AdSense ads or promoting affiliate programs in your blog.

2. MLM (Network Marketing)

Believe me, this is one of the easiest & quickest way to get rich. Not one, but I have literally seen hundreds of people made millions of dollars though network marketing. No education, no qualification & low investment needed to get big success in MLM.
So what exactly you need to start making money from network marketing.

• A best MLM company & plan – Check top 10 network marketing companies
• High motivation & stubbornness
• Leadership skills – check top 10 strategies of successful MLM leader

If you want to increases the speed of success, you can promote your MLM company through Internet.

3. Shows like ‘Who Wants to Be a Millionaire’ or ‘KBC’

Whether it is KBC in India or ‘Who Wants to Be a Millionaire?’ in USA, there is a big scope of making a million dollars in just 1 hour time. The major here is your luck. Another important factor is your knowledge.
Hundreds of people earn big amounts every season in these shows. Many of them have earned even 1 million dollar on their sheer intelligence.

4. Stock market

What better option for people with financial knowledge? However, high returns in stock markets involve high risks. Stocks have the ability to make you millionaire overnight, or bankrupt too.
So play safe & in limits. Your knowledge about market plays a very important role to make big money in stock market trading.
Even if you have lots of knowledge, there are some basic rules of stock market you need to follow. In order to make (not lose) big money in share market, stay updated regularly through finance blogs or news channels like CNBC, Bloomberg etc.

5. Bring a new idea

There is no second opinion in the philosophy: “An idea can change your life”. Here I am not talking about the idea to make money but an idea to solve some problems in your life.
Some of the ideas that made people super rich –

• Larry Page & Sergey Brin created Google
• Mark Zuckerberg created Facebook
• Shai Wininge created Fiverr
• Lalit modi brought the idea of IPL
• Ekta Kapoor redefined TV industry
• Jan Koum Founded Whatsapp

You can also think of small ideas that are new in your city, state or country. Some of the ideas that you can work on:

• Toys on rent business
• Healthy breakfast service
• Food Truck
• Virtual assistant services
• Cost cutting services
• Social media profile management
• Your own new idea….
  

6. Make Viral YouTube videos

Watching videos has become a growing trend on Internet. If you have some unique and viral content and want to share with people, upload them on YouTube. You can earn minimum $1 per 1000 views.
Sometime even one simple video can make you earn thousands of dollars like Charlie Bit My Finger or Dhinchak Pooja. If you create a channel and create quality videos regularly then there are great chances of becoming rich.
If your channel becomes famous you can earn millions by joining YouTube Partner Program.
You can find some of the YouTube video ideas here and check some of these top YouTube earners who makes millions of dollars monthly.

7. Gambling

There are many legal ways of gambling & betting you can use to become rich. You can find number of online gambling sites, casinos or you can even buy lottery tickets.
But there is an equal chance of losing your money. If you can afford to take this risk then this is also one of the best way to make money.

8. Work hard towards your passion

Every person in this world comes with some passion. Don’t let this waste. Work hard towards your passion that when there is a discussion on that topic, people will know your name.

• Who do you remember, when you talk about football match:- Ronaldo or Messi
• Who do you remember, when you talk about movies:- Brad Pitt
• Who do you remember, when you talk about best PAAN:- Muchhad Paanwala or …?
• Who do you think about, when you talk cricket:- Sachin or …..?

There are thousands of such examples.
You have the passion for photography, you can become a top photographer; you have passion in studies, you can do your best in education; you have passion in sports, you can become a top sportsperson; you have the passion in music, you can excel in music world & so on.

9. Marry a Rich Girl / Boy

Bill Gates says: ‘ It is not your fault if you are born poor. But it is definitely your fault if you remain poor.’ What easy option can you find than marry a rich girl (if you are boy) / boy (if you are a girl). If you can manage to marry a rich girl or boy then you can make yourself a rich person.
There are lots of ideas on internet that will give you the secret of attracting a girl. If you follow this idea then follow with a true heart & never try to cheat anyone.

11. Ancestral Will

A Will is a legal document when a person wants to transfer his property or possession to his legal possessor or immediate relatives. If you are legally nominated as the possessor in the will, you can become rich overnight after the persons death.

12. Invent something & earn royalties through Patents

You can even think of inventing something and earn royalty by patenting your product. If anyone wants to use your patent product, he/she will pay you what’s known as a licensing fee. This can become a lucrative business as you can make millions in profit.
Bayer sells cancer drug Nexavar and earns millions per month through its patent drug.

13. Lottery

This is one of the simple and easiest methods to earn money with little investment. One can play online lottery to earn money in his free time and quickly become rich. Online sites like Playwin, Lotto lottery are quite popular to play online lottery.

Not Recommended Ways to Get Rich Fast

Other ways to become rich is making money though illegal ways which sometimes make more money than some of the most profitable businesses. But none of these ways are recommended as these are against the law..

1) Carding

Carding is trafficking of bank accounts, credit/debit cards to withdraw money through fraudulent activities. The use of credit cards have increased tremendously to pay bills and for online shopping. You can steal credit card information or bank details information and use it to buy lavish and Luxury product in account holder’s name.

2) Illegal Trading

A lot of dark web platforms/merchants are there for illegal buying and selling of restricted goods or products. If you can find someone who is trading illegal goods you can buy it in dirt cheap price and sell it to someone who wants to buy it. Just add your commission and you are good to earn some hefty amount.

3) Webcam Model

Although this is the fast way to get rich but this can tarnish your image in the society. You need to become a member to an online web cam site . If looking to become rich quickly watch out for clients from western countries who can pay you in dollars to watch your live footage.

4) Start an Escort service

Starting and operating an Escort service can bring in thousands of dollars on monthly basis. One needs to connect with top models and watch for clients who are ready to spend hefty amount on them.
Earn your commission on every client who takes your escort service. This is one of the most high profile business where you can become rich overnight.

5) Ponzi Scheme/ Fake Scheme

A Ponzi scheme is a fraudulent service which promises high returns to its investors on their investment. You can create ponzi scheme and grab the interest of the investors who are ready to invest in your scheme/business.
The more people invest, greater would be your profits. You can keep paying your older investors till you have funds coming in. When flow runs out you can close the scheme and go underground.

6) Hackers for Organized crime or Cyber crime to steal money

One of the rising ways, due to increase in the number of internet users, is to steal money online or sell critical information through hacking. One who understands technology and has hacking skills can become rich overnight by hacking someone’s account or steal giant companies data and sell it for millions to their competitors.
One should also understand that it’s a high risk affair and you could be jailed for years under the cyber crime law.

7) Drugs Dealer

This can be a high income generating business for you as there is a steep rise in the number of people who wants to consume drugs. Watch out for a drug baron to purchase drugs illegally and sell it buyers in small quantity.
Once your name becomes synonymous among drug user’s, druggie’s will start approaching you. You can become rich by dealing and selling drugs with high demand. One should remember that this is a high risk business and if caught you could land in jail for years.

8) Gold Smuggling

Being a gold smuggler can fetch you high income as Gold being one of the precious metal with high demand both nationally and internationally. You can become a gold smuggler by supplying large quantities of gold through hidden ways in different countries.
One can become rich as buyers are ready to buy gold worth millions of dollars. You can calculate the commission you can earn through smuggling of gold.

9) Illegal Wildlife Trade

Wildlife Trafficking is also a way where you can make big money and become rich through sale of rare animal species. Rare animal species like India Pangolin, Owl, Tortoise, tigers are always in demand.
You can watch out for buyers nationally as well as internationally and quote huge amount and can earn anything thousands of dollars.
One should remember that illegal wildlife trade is the 4^th largest crime in the world leading to decimation of wildlife species.

10) Black Arms and Ammunitions Trade

Arms trafficking also know as gunrunning, is trafficking of contraband weapons and ammunitions. There is always a high demand for arms and ammunitions in the international black market which is estimated to be around $8 Billion.
Illicit arm and ammunitions holds about 10%-20%. Hence you can calculate your earnings if you become a trader for black arms and ammunitions. Laws are very strict against illegal trading of Black arms as you could be jailed for more than 10 years with heavy fines.

11) Counterfeit Products

Counterfeiting products means imitating or creating a copy of a high priced branded product. Countries like India, Dubai, USA is huge market and has become a base for manufacturing duplicates for branded products.
You can manufacture or import from china and sell in the local market with low price tags with high volumes and easily generate high profits to become rich.

12) Illegal money transfers

Illegal money transfer, also called ‘Hawala’ is a money transfer system widely used in Arab states and different parts of the world. The broker has to ensure safe transfer of money without actually physically moving the money.
In a year about $700 million worth of amount is transferred illegally. Hence you can easily become rich if you become a hawala broker.
All these ways are not recommended because you can get into very serious trouble with law. This will also severely affect your family and social status.
So which idea you want to go with to become rich. If you are already rich, then how did you become rich. Tell your story through comment.

How to Create and Manage a Budget

Budgeting has a bad reputation among a lot of America households who view it as a way to strip all the fun out of spending money. No more shopping. No more eating out at restaurants. No more golfing on weekends.

That is not the purpose of a purpose of a budget.

A budget simply shows how much money you have coming in and how those funds are spent. It’s one of the most important tools in building a successful financial future, because it helps you get the most out of your money.

Regardless of economic standing or which generation you fall into, every consumer can benefit from creating and managing a budget. A budget gives people a sense of control over their money. Think of a budget as a financial foundation. Each person’s foundation is going to be different, just as each financial situation is different.

Choosing a Budgeting System

There are four basic ways to create, track and monitor a budget. Each system uses different techniques, but they all center on organization and attention to detail.

• The Notebook and Pen: This is the oldest method for budgeting, and it’s also the least expensive option. With this method, you simply write down all your sources of income and all your expenses. If they balance, you’re good to go.
• The Spreadsheet: The most popular spreadsheet software for budgeting is Microsoft Excel. Many websites offer free samples of Excel budgeting worksheets that consumers can use, instead of trying to create their own. A spreadsheet lets you organize a lot of information easily and does the math for you.
• Free Online Software: There are several free web-based software programs that can help with budgeting. Such programs like Manilla and Mint.com allow you to create and group your expenses into categories and track your spending, so you can see exactly where your money is going as soon as the transaction takes place.
• Financial Software: There are also financial software programs, but you need to be computer-savvy to use them. Quicken is a leading product.

You can also check with your local credit union or bank for tips and tricks. Your saving institution may even have budgeting worksheets on hand to get you started. If you prefer, the U.S. Financial Literacy and Education Commission (FLEC) has numerous budgeting worksheets and resources to help you at any stage of life.

Creating a Budget

Budgeting strategies and techniques vary across the board. There will be differences, for example, between what works for a first-year college student and one for a retiree. But there are five basic steps in creating a budget. They are all important because they build on one another, helping you organize your finances sensibly.

Step 1: Set Goals

There are two types of financial goals: immediate and long range. Immediate goals focus on using your money today, while long-range goals deal with saving and spending over decades. Both are important, and complement one another: Saving money today affects what you spend now but also how much you’ll have later in life.
You need to determine which goals address necessities and which ones cover luxuries. Then, you can prioritize your financial goals accordingly.
Immediate financial goals include covering current expenses. Some of these are obligatory and include your mortgage or rent payment, car loans, utilities bills, child care, food, cell phone and household supplies. Secondary goals, called discretionary items, include non-essential clothing, subscriptions, dining out and taking vacations. Long-range financial goals could also include retirement savings, investments and charitable donations. If you have debt, paying it down can be both obligatory and discretionary. Making required payments is essential to financial solvency, but paying debt early, while not required, can make long-term sense.

Step 2: Calculate Your Income and Expenses

After you determine your financial goals, you need a plan for reaching them. To do this, you need to evaluate your income and your expenses. Most people budget monthly because most bills follow a monthly schedule.
Start by making a list of your monthly income sources, including your salary (after taxes), any bonuses you incur on a regular basis, and child support or alimony payments. If you don’t know the exact amount, you can use an estimate. Once you have your numbers, add them up. The total is your monthly income.
The next part of the equation is your expenses, which fall into three categories: fixed committed expenses, variable committed expenses and discretionary expenses.

• Fixed committed expenses: These have a fixed monthly amount, such as your mortgage or rent.
• Variable committed expense: These vary from one month to the next month based on need, and would include groceries and gasoline.
• Discretionary expenses: As noted, these are optional expenses and include recreation and entertainment. A gym membership would also fall into this category. Discretionary expenses often make life more fulfilling, but they should be the first expenses to go if you can’t afford the basics.

If you fail to pay off your credit card bills each month, you’ll begin to pay a great deal of interest. This can play havoc with any budget. If your carried-over credit card payments eat up more than 10% of your monthly income, you should consider speaking with a nonprofit credit counselor. Over the telephone or online, a free credit counseling session will walk you through your budget and recommend expenses that can be reduced or eliminated. If you qualify for a debt management program, you may be able to reduce your monthly debt payments as well.

Step 3: Analyze Your Spending and Balance Your Checkbook

The goal in budgeting is to make sure your expenses do not exceed your income. If they do, and more money is going out than is coming in, then you need to make adjustments. This doesn’t necessarily mean you need to start penny-pinching; it just means it is time to revisit the discretionary cost category and see where you are willing and able to cut the fat.
If you make any payments by check, your checkbook register can help you keep track of incoming and outgoing money, and what you spend money on. Although paying by check is becoming rarer, those who stick to this payment method should keep their checkbooks balanced. This will help you avoid overdraft fees or bounced checks, and it can shed some light on your spending habits.

Here are the basics:

• Keep records for all your deposits and purchases. Record each one in your check register, which the bank will provide you.
• Print out or download your monthly bank statement if you aren’t already getting one in the mail. If you’re doing everything online, there is software that can make this step — and budgeting — easy.
• Do your own math for deposits and withdrawals to make sure your bank hasn’t missed anything or taken liberties with your money. Reconcile line by line, making sure your record of checks is the same as the statement.
• Find the ending number from each monthly statement and work backward, check to see what has cleared, and what has not cleared. Deposits that haven’t cleared will need to be subtracted from your balance. If your checks haven’t cleared, they will have to be added back to your balance until they do.
• Go line by line and account for any fees you’re charged. Seeing them up close may prompt you to call and ask to have some removed, which the banks often will do if you persist. Also, add the pennies of interest you may have received.
• Again, if you have access to a computer, or even a smartphone, this process can be automated using financial software or apps, saving you time and frustration. The goal is to review your cash flow, look for errors and learn from what you see.
  

Step 4: Revisit Your Original Budget

After you’ve had a chance to monitor your income and expenses for a month or two, you will be more aware of areas that need adjusting. Maybe your initial monthly income estimates were off, or perhaps you didn’t account for expenses like car repairs or veterinary bills. Make adjustments, but always balance inflows with outflows.
Once you work out all the kinks in your budget, you need to commit to following it. No budget is forever, however, so periodic reviews are key to success.
If you get a promotion, for example, you can increase your discretionary spending as well as your savings goals. On the other hand, a layoff or fewer work hours could mean cutting back on spending until you restore your income.
Savings should be part of the plan. Financial planners recommend that your savings cover six months of income, enough to compensate for a job loss or other emergency. You might find it useful to open a separate savings account and fund it gradually until you reach the goal. Keeping a separate account will make it more difficult to raid the emergency fund to cover non-essentials.

Step 5: Commitment

Creating a budget is a great step in working toward a more financially sound future for you and your family. Committing to your budget will get you there. Remain realistic, evaluate it often and don’t be afraid to adjust. Budgeting is all about balance.

Managing Your Budget When Unexpected Bills Arrive

As mentioned, an emergency fund is crucial to financial security. Start by setting aside $50 per week. In a year, you would have $2,600, plus any interest, for when the refrigerator stops working or when the transmission blows.

Experts recommend looking at your withholding taxes to find hidden cash. If you receive a large refund every year, perhaps you need to change your filing status to receive additional money in your paycheck to put toward an emergency fund. Unless, that is, you are putting your tax return funds into that fund.

Medical crises in particular can turn a balanced budget upside down. Negotiate large medical expenses, such as an emergency hospital stay, with the hospital. Almost all hospitals negotiate fees. Often if you contact them immediately instead of waiting until the amount goes into collections, the hospital or provider’s office can set up a payment plan.

If not, a medical bill consolidation may help, as it allows you to combine all your medical bills into one lower monthly bill through an agency or a bank loan. This not only makes it easier on you, but the arrangement protects your credit score because you are able to make on-time payments. The downside is it may take you longer to pay your debt in full.

Benefits of Budgeting

Everyone can benefit from taking a pronounced and proactive approach to control their finances. Committing to your budget will help guide you into a much better financial position.

Budgeting can improve your life because it:

• Reveals waste. Creating a budget sheds light on areas that many people neglect on a day-to-day basis.
• Directs priorities. A budget allows for people to look at the big picture of their spending habits and set new priorities to maximize their money’s potential.
• Creates new habits. When people get a clearer picture of how they’ve been using their money, it allows them to shift expenditures into different categories, making them more conscious of unnecessary spending.
• Reduces stress. Finances are one of the top stress-inducing situations. When there is a sense of control over the money coming in and the money going out, the stress can transform into a feeling of empowerment.
• Educates. Having a budget allows people to view money as a tool, shifting the mindset to focus on long-term goals and future needs.

Creating a budget is the first step, but maintaining the budget is where you start to see real growth in yourself and more stretch in your dollar. Sticking to a budget can be a difficult task for people who aren’t used to spending boundaries or self-discipline in their finances, so it’s important to maintain a positive attitude toward the process.

Staying motivated can help alleviate some of the pressures of budgeting. Consider setting aside some money each month so you can look forward to a relaxing vacation at the end of the year.
Finally, set realistic goals. Start slowly, building up to a plan that works for you and your lifestyle.

The Finer Points

Wants vs. Needs

“You Can’t Always Get What You Want”, one of the Rolling Stones well-known 1960s hits, touches on an issue many of us face all the time. The message is you might not be able to get things you want, but if you try, you’ll get what you need.

How do you separate wants from needs and why bother? For many of us, knowing where to draw the line can mean the difference between creating a successful budget and going broke. So what’s the difference. Most needs are synonymous with non-discretionary expenditures. They include shelter, which demands payment of rent or a mortgage, and food, which results in grocery bills. There are plenty other items that are basic and non-negotiable, but the non-negotiable category leaves room for choice.

For instance, if you need a car to get to work, you could buy a used Kia sedan or a new BMW. The price difference is huge, and the Beemer is certain to impress your friends and offer a fine driving experience. The question is what can you afford? If you make a $500,000 a year, the BMW might be yours without stretching your finances. But if you’re taking home $40,000, it’s better to stick with the Kia.

The same rule applies to housing – should you rent a one-bedroom apartment or buy a $400,000 house? Again, both offer shelter, but at radically different costs.

There’s also the difference between needs and items that you could get by without. Think about taking a vacation to Thailand versus a week driving to state parks near your home. Both can offer satisfying and relaxing places to spend your downtown, but the costs are radically different. Also think about impulse buys. Say you go to home improvement store to buy some lawn fertilizer and leave with a lawnmower you hadn’t planned to buy. You might need a new mover, but it’s a good idea to research models and prices before putting your money down.

Knowing the difference between wants and needs is a key to a successful budget. You can budget for some impulse purchases or product upgrades, but understand what you’re doing, show restraint and always make sure your budget balances.

Seasonal Expenses

A sizable amount of your money is likely to go to one-off expenses that arise over the course of a year. Examples include holiday presents, birthday gifts, summer vacation costs and back-to-school spending. Some seasonal expenses are for stand-alone items like presents, others are for basics. Heating you home is an issue for the cold-weather months, for instance, and a higher water bill might coincide with irrigating your lawn in the summer. Clothing is also seasonal, with swimming suits for the summer and heavy jackets for the winter.

When you draw a budget, study your outflows during the past year or two and estimate the impact of seasonal costs, then build those costs into your plan. If your summer costs are much higher than springtime, make sure you save enough in the spring to fund spending in the summer.

Checking in on Your Budget

Budgets are living documents. Just as life is constantly changing, the demands on your budget change too. For that reason, it’s good to regularly review you budget to adjust for changes in income and expenses.

What should you consider? On the income side, you should make adjustments if you get a raise or receive a windfall like an inheritance. You need to adjust if you lose your job or move to a new one. Getting married or divorced requires a massive reworking of your budget. So does having a child. Sometimes the changes are smaller or temporary, things like a medical insurance copayment might require a temporary adjustment.

You don’t need to overhaul your entire budget when changes happen. Your rent is rent, and what you spend each month on your car is unlikely to change. But other things are more flexible. If you income drops, you might eat out less. If it goes up, you could save more, pay off debt quicker or make a discretionary purchase.

There’s no hard and fast rule about when to review your budget. Some financial consultants suggest doing it constantly, others suggest every several months. It’s probably good to consider revisiting your budget when life-changing events occur, and set intervals to adjust for smaller stuff like inflation and changes in fixed costs.

Automatic Saving and Recommended Percentages

You should strongly consider making automatic saving a part of your budget. What is automatic saving? It’s the money you set aside for funding an emergency account, paying for Christmas gifts later in the year or creating a college fund for your kids.

Automatic saving is best handled through paycheck withholding. If you’re saving for retirement and you company offers a 401(k) plan, sign up and have money withheld from your paycheck.  Many employers also offer medical and childcare savings plans, which are typically tax exempt. You can also have your salary automatically deposited in a checking account, then transfer part of the pay to a savings account that you don’t plan to touch.

There are many strategies for automatic savings. Talk to a financial adviser to learn more about the options and what amount of saving you can afford. Once you implement a plan, stick with it. Percentages will vary, but if your company will match contributions to your 401(k), save at least the maximum amount that will be matched. Other savings will be largely determined by your income and expenses. If you need to withhold 20% of your paycheck to cover the rent, make sure you do it. Knowing how much money you need and saving for it will make sure you meet your expenses and prepare for the future.

Financial experts have come up with recommended percentages for spending to help people budgeting for the first time. For example, it is suggested you spend no more than 30% of your gross monthly income on housing, whether you’re renting or owning.

Automobiles are the next biggest expense for consumers and probably the biggest temptation to overspend. The best idea is to keep spending between 10% and 15% of your monthly income. Anything beyond that stretches you thin, especially if a financial emergency arises.

Student loans might be another variable in your monthly budget. There are several income-based repayment plans that limit your payments to 10-15% of your income. That’s a safe number, but often will extend payments a few years and end up costing you a small fortune in interest charges. Try using 20% of your budget, especially if you don’t have a car payment or are splitting rent with roommates.

Other suggested percentages for ongoing expenses include utilities (10%); food (10-15%) and savings (10-15%).

Timing Your Budget

You should commit to staying on budget until you see results. The best way to accomplish this is to create an annual plan that covers your fixed costs like rent and car payment, your seasonal costs like holiday presents and vacations and your discretionary costs like eating out and buying clothes. Work all these things into a 12-month projection and follow it.

If you find flaws in the plan or your cashflow changes, you can modify it. Otherwise, try to stay with it. Consider using budgeting software or apps to help you. If you discipline yourself, you’ll be surprised as debts get paid, savings grow and your needs are met.

7 Debt Traps to Avoid

Payday Loans

Payday loans are one of the most obvious debt traps. These are small loans designed to "help you" financially until your next paycheck. Then, once you receive your paycheck, you repay the loan. However, in many situations, because the interest is so high, individuals cannot pay back the loan in full when it is time for repayment. (Another drawback with these loans is that they come with hefty fees attached to them, making them even more costly.) This can put the loan in default, or you need to take out another loan to repay the original one. It soon becomes a never-ending cycle of debt.

Credit Cards

It is extremely easy to swipe your credit card and buy anything you desire, even though you don't have any money. According to Creditcards.com, the average household has accumulated $9,600 in credit card debt.

When you only pay the minimum payment on a credit card with an extremely high balance, you are basically paying just the interest. You are making very little progress in paying off the starting balance. The average interest rate on credit cards is approximately 15 percent. In addition, you may have to pay annual fees or late fees on top of that, burying you even further in debt.

Debt Settlement

Debt settlement can have its benefits. Debt settlement programs involve a company working with your creditors to settle your debt, allowing you to pay less so you can dig yourself out of debt.

While the promise of debt settlement may sound alluring, it can damage your credit score. Bad credit scores can mean high interest rates on items such as a home or car. In addition, you may have to pay large fees for the debt settlement process, hurting you further.

Debt Consolidation

Debt consolidation is a lot like debt settlement. In some cases, this may not be a bad thing. However, you still need to be wary. When you consolidate your debt, you are extending the repayment process. You end up paying more in the long run. In addition, if you don't stay up on your repayments, you may face severe consequences such as higher interest rates or large fees.

Income Tax Refund Loans

A tax refund loan is when you receive a loan based on how much you are expected to receive with your income tax refund. The downside to these loans is you can expect huge interest rates, sometimes more than 60 percent. Plus, you may incur huge fees.

Home Equity Loans

This type of loan is simply setting yourself up for financial ruin. With a home equity loan, you use the equity of your home as collateral. The amount of money you can borrow depends on the value of your property. While this can be a fast way to receive cash, if you miss any payments and don't keep up on the loan, you could quickly lose your home.

Buying Too Large of a Home

When buying a home, you may want the bigger, more beautiful home. However, if you don't have the income to make those payments (and if you were to suddenly lose your income), you could be perilously setting yourself up to lose everything. When determining how much house you can afford, housing expenses should not exceed more than 28 percent of your income. If they do, keep looking. There are lots of good homes that won't eat up your entire monthly income.

While many American households struggle with debt, that doesn't mean that you have to. Being smart with your money and avoiding the debt traps listed above helps position yourself and your family for long-term financial security and happiness.

Best 10 Tips to avoid falling into a Debt Trap

Debt Trap? Well this is the modern day trap that most of us fall into knowingly or unknowingly even without actually understanding its rear consequences.
But to be honest this is not only the fault of mismanagement of personal finance but the trending new lifestyles, new desires and things which were once a luxury becoming day-to-day necessities.

Credit in all forms is made available to us in glamorous packages and is marketed in such a way that it penetrates deep within our minds creating an irresistible craving towards them.
“Why not give it a try? After all I am definitely eligible for this”.  This is where the actual trap story begins.

Going in for a credit or a loan just because it is well within our reach is the first mistake that is made most commonly.
Getting in to a debt is not a one-day task, it actually demands most of your years repaying them. This not only keeps you indebted but also poses a barrier when you are actually in real need of a loan or credit.

How to Avoid Debt?

Avoid Debt –These two words would sound simple & easy but when you try to implement them, you would realize the actual hardship hidden. Why should we avoid debts when we are worthy enough to get approved of one?

This is one query that might arise when we speak of avoiding debts.  But wait give this a second thought. Why should you take a loan/credit when it is not really a necessity?

Taking a credit or loan and buying something, which we have dreamt of, might give the feeling of attaining success. But the in-depth truth is that this feeling is often short-lived and within you realize the truth, you would have fallen in the trap of debt. Taking a loan is in no way a sin, but analyzing the actual necessity of the loan is where the smartness lies.

What is a Debt Trap – literally?

This is a stimulustechnique that is made available to the customer who is basically the borrower, which actually make them fall prey to long-term commitments with hidden terms and conditions that make the borrowers nearly impossible to come out of these debts.

Getting out of a debt trap is not an easy task. We often discuss about the ways and means to get out of a debt trap, but that is the second stage, why not perform the first stage of not falling into a debt trap successfully. This could certainly prevent us from going to the second phase of discussions to clear the debts.

Now as we have equipped ourselves with some basic know-how of debts and debt traps, it is important to know about the various mechanisms and practices to avoid falling in to such debt traps and to protect ourselves from learning the lesson the hard way.

Here comes the TTT (Top Ten Tips) to avoid falling in to a debt trap.

1. Use liquid cash only

When you use only cash for all your needs and shopping, you actually realize how much cash you are spending and this will psychologically make you spend less than spending with your plastic cards.

Also this will reduce the spending on your credit cards and thereby reduce your debts. Follow the golden rule of “Earn before you spend and spend only from what you have earned”.

2. Never cross the limit 

Spend from what you earn, does not mean that you can spend all that you earn. It is very important that you save a portion of your earnings and make it a habit. This will one day save you from becoming indebted.

3. Be savings – ready before you take a debt

If you have decided to go in for a loan in the near future, then start saving as much as possible from day 1 of your decision.  This will serve as the down payment amount and will reduce your loan to a great extent.

4. Make note of your liabilities:

Always be aware of your debts and the amount that you are indebted. This not only gives you a clear picture of your financial status but also limits you from entering into further debts.  Develop the habit of making a detailed note of your creditors and the amount you owe to them respectively.

Don’t just swipe your credit card just because you are not going to pay liquid cash. Swiping a credit card for your expenses is worse than paying from your pocket with ready cash, because interest accrues on the amount spent and the debt amount rises rapidly with hidden charges.

5. Minimize the number of your credit cards:

Having a number of credit cards is not a matter to be proud of, it only makes you all the more indebted and your chances of falling in to the debt trap certain. Try managing with one card and use that only in cases of real emergency.

6. Surrender your extra cards: 

Having a number of cards in your pocket, means you are going to be all the more tempted to use them on unnecessary expenses. Human mind can never be satisfied. So it is a wise move to surrender all your extra cards and help your mind be in control.

7. Convert your debts into EMI’s:

Once you have decided to surrender your cards, you might be required to settle the balances on them. So it is better to consolidate all the balances and work out a reasonable monthly installment repayment plan and settle the dues as soon as possible.

8. Pay your Bills on time: 

Make it a habit to pay all your bills on time and as far as credit cards are concerned, don’t just pay the minimum amount due but clear off the entire amount due by each month. This would prevent the balances accumulating and interests being accrued and your debts increasing. 

9. Never use your savings to pay your credit cards:

Credit card payments are to be made from your earnings and not from your savings. You should not allow your balances exceed the permissible limit. If it ever happens, go in for settlement options through EMI’s. But never ever break your savings to pay for your credit cards.

10. Pay your dues evenly over all your loans:

While paying off your debts, ensure that you pay all your debts in an evenly spread portfolio. Make sure that your DTI ratio doesn’t get affected.

Today we have a scenario where in most of the educated youth are often stuck in unmanageable debts. This may be to the student loan debt that they would have utilized and other debts that they would have accumulated over the years. The whole picture is even coined as “Generation Debt”.

When we look at the general facts about Student loan debts, we would be rather shocked.  A recent report reveals the following facts:

• The total U.S. Student Loan Debt touches a whooping $1.26 trillion
• The number of Americans with Student Loan debt stands at 43.3 million
• The delinquency rate of student loans is at 11.6%
• The Average and Median monthly student loan payment for students aged from 20 to 30 years stands at $351and $203 respectively.

To make things more precise, the average student who graduates will have an enormous $40000 as his student loan debt. But this can be dealt with in a wise manner.

What are the options to reduce student loan debts? 

• Make sure you put the option of grace period to maximum use. Start saving the installment amount right from the beginning. Just because you are not required to pay during the grace period it does not mean that you could spend the money unnecessarily. You can later use this saving to pay a down payment for your loan after your grace period, thereby reducing your debt levels.
• Do a thorough research of the details of the loan and its features. Get to know who the exact lender is? How much is your outstanding? What are the available repayment options?
• Once you are done with ample research, now it is time that you choose a suitable repayment option that best suits your income and lifestyle patterns. Also consider loan consolidation to ease your payment process.
• Adapt a simple lifestyle, well at least until you come out of your debts. Live simple and spend as little as possible. All these little sacrifices are really worth your debt-free and peaceful future.
• Formulate a budget and learn to stick to your budget.

Scholarships & Grants:

There are a lot of scholarships and grants offered to students who pursue their education and help them in reducing the loans that they apply for. But there are students who don’t become eligible to such forms of scholarships or grants, or sometimes their education costs exceed the grant amounts, forcing them to go in for loans.

There are no such grants and scholarships to repay the student loans. However, the student loan debts have to be repaid and there are a lot of options and ways by which this can be done.

• PSLF (Public Service Loan Forgiveness) – If you happen to be working in a public sector, your federal loans may be forgiven after 10 successive years of payment. This is possible if you are a full-time employee in a government sector.
• Employment – based Opportunities – Depending upon the type of employment you choose, you might be eligible for such programs wherein a portion of your loan gets forgiveness or you receive grants and awards for your services. Such professions include Doctors, nurses, attorney’s and Teachers
• IBR – It is the repayment plan, which is based on your income structure. This helps you program your monthly payments according to the income you earn.
• Peace Corps – If you volunteer with Peace Corps for a period of 2 years, your Perkin’s Loan might be partially forgiven and if with the extension of your volunteering service, the forgiveness amount would also increase.
• Americorps – If you are a person who wants to work for a social cause in resolving community issues, working with Americorps is the best option. You not only get to realize your dreams but also receive stipends, rewards and grants.
• SponsorChange – This is a platform that provides opportunities based on your skill-sets and in exchange for your skilled labour, they offer to pay your student loans.
• Zerobound – This is actually a crowd-funding platform wherein you volunteer for a campaign and the sponsor’s pay each volunteer according to their talents.
• Givling – This is also a similar crowd-funding program like Zerobound. Once you register, you have to wait for your turn to get your loans paid off.

All these options come as a boon to students who are stuck up with student loan debts. Though these are not official grants, you can rely on them to help you to reduce your student loan debts.

Inference:

It is an undisputed truth that in this fast- paced world desire-driven world; people often tent to fall prey in to the so-called debt trap. It is our duty as responsible individuals to stay on vigil and carefully monitor our lifestyle patter.
Always have in mind the often-neglected proverbs – “Look before you Leap” – “Think Twice before you act” – “Slow and steady still wins the race”. All these proverbs are sure to give an in-depth insight about the reality of life.
Formulate a more disciplined life style and spending pattern. Only spend what you have earned. This not only means that you will be out of debt but also this acts as a psychological barrier to spend more, because you know how hard it is to actually earn that money.
Always stay employed, don’t wait for that dream job or that perfect job. No doubt you will get to it one day, but in the meanwhile keeps yourself self-sufficient by staying employed. Only that will help you to avoid falling into a debt trap.
In most cases, the biggest opponent you encounter is not your financial inability, but your own mind that is in all means alluring to spend more. While winning over your adamant mind is really a tough task, always remember contentment is the key to live debt-free and in ultimate serenity.