Edwards 1

Dakota Edwards
Erin Rogers
Writing 1010
13 October 2015

Having only my mom to support my two older sisters and I really taught me and
continues to teach me valuable lessons about handling money, such as using currency to
purchase needs instead of wants and staying out of debt, as well as gaining in depth knowledge.
As the years have passed I have grown to notice the struggles my mom has faced as a single
parent, battling to provide for our familys needs and staying out of debt. Although many
hardships have knocked on our door, my mom has made it possible to stay debt free by resisting
the temptation of using a credit card or receiving a loan that accumulates high interest rates.
However, there was a time in 2001, when my mom and I were involved in a harsh car accident
that was my mothers fault. She was held responsible for the damages of our only car and the
vehicle she had damaged. On top of that we did not have car insurance, so my mother had the
responsibility of large amounts of bills in upcoming years. The amount my mother had to pay in
total closely summed up to be nine thousand dollars in damages, bill collector fees, and loan
fees. Since we had more bills to pay we had less money to spend on other necessitates such as
having less groceries, cleaning supplies for the house and hygiene purposes, electricity and hot
water. As my sisters and I adapted to having less money in our lives we got used to only asking
for things were really needed or nothing at all. My mother also made a change in her life style by
becoming wise with every penny she had spent. This taught my mom smart ways to spend

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money while paying off her debt as well as creating a family discipline towards spending money.
It took my mom eight extensive years, but she finally made her last payment in 2009. I see the
car wreck as one of the millions of ways I could get myself into debt, and I want to do my best to
avoid these challenges by gaining more knowledge about the diverse areas of debt.
People get into debt for many reasons. The three main causes that stood out to me were
that of not being educated well enough in the field of Finances, saving too little or not at all, and
poor self-discipline when handling money. The first reason people go into debt is because they
are either uneducated financially, or educated wrongfully which steers them in the wrong path of
financial success and towards the path of financial debt. This can be reversed by seeking help for
financial success. Knowing whether you are a spender or a saver when first receiving money is
very crucial. Using money to better yourself by getting into the habit of depositing money and
leaving it to increase with interest. Depositing money only to withdraw for wants instead of
needs is a complete contradiction when saved money should only be used for needs. The biggest
reason people go into debt is because they are managing their money without self-discipline.
Habits that indicate that one hasnt the slightest clue how to spend their money wisely and
correctly, which can be improved by using payment plans and to budget their money. Debt is just
a product the nation has to offer, not a privilege. Back in 2008 when the nation went through a
huge economic mess, United States citizens started to pay more attention to the high prices of
mortgages and credit card debt. Among these many citizens, seventy percent of Americans live
from paycheck to paycheck like my family when my mother was in deep debt. Citizens have
been convinced that obtaining debt is good because it has been marketed so well that they think
they are being rewarded or it is the only way to survive. Debt has been marketed for so long it is
easier to live a life around the norm of other citizens that have been through their own debt

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problems to make one feel like they are part of the dominant way of spending their money.
Because of this norm, living a debt free life is just unheard of but in fact gives one a whole
different perspective with spending their money wisely and correctly.
As the nations debt grows greater every second of the day, it is ridiculous to believe that
United States citizens trust themselves to own a credit card to the point where they are obtaining
one. Credit card companies make the consumer feel like they are special or accepted, and that
they are being done a courtesy. Once debt starts to increase, your options of spending money on
big purchases decrease, debt only limits your purchase range and even job opportunities. When
my mother was offered a managers position, she only kept the position for a maximum of two
weeks when her higher power ran her credit and was demoted due to her low credit score; she
was singled out because she was seen as untrustworthy. I have heard it from many people, even
my own mother that I need to build a good credit score to have good credit. This means that to
make a purchase with a credit card which may cause me to go in debt, I am graded on how well I
pay it off with a credit score (FICO score) basically, the higher score I have represents how well I
am at paying off my debt for making a purchase with my credit card, the lower the score the
worse one is at paying off debt. Dont worry, I do not have or plan to have a credit card anytime
soon.
Purchasing a new vehicle is very difficult or nearly impossible to some when they have
bad credit or no credit at all. Unless you are loaded with money in your bank account or are
reaching an older age, you shouldnt be making a purchase on any new car. First of all, the most
popular known fact is once you drive your car off the lot, it depreciates its value by at least half
of what was initially worth. As I see it, there are three ways to make a purchase on a new car in

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return receiving debt ordered from worse to best. The first of which is a car loan with the
1

dealership, which usually offers a car lien2 and the highest interest rate of the four options. An

actual scandalous way citizens purchase a new car is by lying to their financial institution when
they ask for a signature loan that has lower interest rates than a car loan from a dealership. The
reason why this tests integrity is because one can lie to their banking institution about needing
the signature loan for something other than a vehicle to receive money then turning around and
using the signature loan to pay off their vehicle in full without the bank holding onto the car title
like with a car loan from the bank. If you own the title of the vehicle, the vehicle rightfully
belongs to you only. Similar to a dealership car loan, financial institution car loans also hold a
lien of the vehicle, only they offer extremely lowers interest rates. Both car loans and signature
loans can be made through a financial institution. Paying for a vehicle through loans only makes
a vehicle purchase more than the original price when interest rates are added to the expense.
Paying cash for your vehicle (preferably use) avoids the debt of the three stated above which is
equal to receiving a discount. Pay cash for a vehicle gains financial discipline experience and
helps highlight financial goals. Car dealerships are so used to using the car loan system vehicle
purchases with cash are easily negotiable to get an even better price when a great sum of cash is
slapped to their face.
In conclusion, many decisions to fall into debt surround us all at one point or another. It just
takes the proper amount of experience, knowledge, and self-discipline to become a mastermind
1 Lien: A right to keep possession of property belonging to another person until a
debt owed by that person is discharged.
2Car Loan: A collateral between the Financial Institution or Car Dealership and the buyer,
where the Financial Institution or Car Dealership keep the title of the vehicle until the debt is
paid off by the buyer. A Signature Loan is similar, only you get to keep the title of the vehicle
and still the loaned money to pay for the vehicle.

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in avoiding debt. This is just a little taste of something larger people deal with in their everyday
lives.
Credit cards are the quickest way I know to become broke and stay broke for the rest of your
life!, Credit is an I love debt score.- Dave Ramsey

Works Cited
Bankrate. (2015, October 13). Retrieved from bankrate.com:
http://www.bankrate.com/finance/financial-literacy/the-evolution-ofcredit-cards-1.aspx
Berger, R. (2015, October 13). DoughRoller. Retrieved from doughroller.net:
http://www.doughroller.net/personal-finance/6-reasons-to-pay-cash-fora-car/
Hands, M. (2015, October 13). Car Proof. Retrieved from carproof.com:
https://www.carproof.com/resource-centre/articles/what-is-a-lien
Ramsey, D. (2014). Foundations in Personal Finance High School Edition.
Brentwood: The Lampo Group, Inc.
Top 10 Personal Loans. (2015, October 13). Retrieved from
top10personalloans.com: http://www.top10personalloans.com/?
kw=personal
%20loan&c=89125518928&t=search&p=&m=b&adpos=1s7&dev=c&

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devmod=&mobval=0&network=g&campaignid=299582608&adgroupi
d=20288625088&targetid=kwd13826290&interest=&physical=9029771&feedid=&a=970&gclid=Cjw
KEAjw1_KwBRDE
US Debt Clock.org. (2015, October 13). Retrieved from usdebtclock.org:
http://www.usdebtclock.org/

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