Prior to the late sixties bankers and investment advisors were among the most conservative people in our society. Before anyone could borrow for consumables such as food or clothes, or even for non-consumables such as cars and houses; his financial status was thoroughly reviewed, and formulas were applied to insure his borrowing stayed within his means to repay. That is not unfortunately true today. The increasing demand to make more loans has widened the parameters of acceptable loans. It is now assumed that the borrowers will discipline themselves to repay what they borrow. Unfortunately, many young couples have no idea how to calculate what they can or cannot afford to pay.
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Combine that with the use of second mortgages to help make the down payments and loans for refrigerators, lawn mowers, and curtains, and you can see why so many young couples end up in financial trouble.
But the main purpose of this article is not to show how most people get into debt but rather to help you understand how to get out of debt. To do that, we need to follow Paul and Julie as they carried out the plan Mr. Woods worked out with them.