Small debt doesn’t seem significant. Buying a piece of furniture on credit or taking out a small loan for a vacation doesn’t usually seem like it will make a very big difference in your finances. But small loans are usually some of the more expensive loans to pay off. In addition it is easy to lose track of how much of your income is actually going to pay off past purchases.
Many companies try to make it easy to get a small loan by making it easy to sign up for a company credit card. They know they can sell to people who don’t have the cash by giving them a credit card to charge it.
With a few exceptions, you should wait to buy something until you can afford to pay the entire price. Multiple little loans for your couch, vacuum, television, etc. can really add up quickly. Buying small things on credit also helps encourage a “debt mindset” that can easily become a bigger problem–especially if you run into difficulties like losing a job, taking a cut in pay, or a few large unexpected expenses.
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