1. Avoid going into debt
Why is this so important? Well, most people already know this, but it’s worth repeating—debt is one of the biggest ways banks and lenders make money, often at the expense of keeping you financially trapped. The more debt you have, the harder it becomes to save, invest, or build real financial security. That’s why avoiding unnecessary debt and managing existing loans wisely is crucial to breaking free from the cycle and taking control of your financial future.
Different types of debt
1. Consumer Debt:
- Credit Card Debt – High-interest revolving debt from credit card usage.
- Personal Loans – Unsecured loans used for various personal expenses.
- Buy Now, Pay Later (BNPL) – Short-term installment loans for purchases.
2. Secured Debt:
- Mortgage Loans – Home loans backed by the property as collateral.
- Auto Loans – Loans for purchasing vehicles, where the car serves as collateral.
- Home Equity Loans & HELOCs – Loans secured against the equity in a home.
3. Student Loan Debt:
- Federal Student Loans – Loans issued by the government with fixed interest rates.
- Private Student Loans – Loans from banks or private lenders, often with higher interest rates.
4. Medical Debt:
Bills from hospitals, doctors, or medical services that haven't been paid.
More debts
5. Business Debt:
Loans taken by businesses, including small business loans, lines of credit, and equipment financing.
7. Payday Loans:
Short-term, high-interest loans often used by people in urgent financial need.