When you start to study to topic of debt management, you’ll notice that some financial experts refer to “good” debt and “bad” debt, and others simple throw all debt into one category. Is there such a thing as good debt, and if so, how can you make sure that your debts are of the right kind? When you see debt as either good or bad, you’ll begin to realize that you can make smart choices when it comes to debt. Smart choices lead to a better financial position, which can help you free yourself from bad debt.
A simple definition of good debt is this: good debt is any form of debt that gives you money back. Don’t confuse this with credit cards with a cash back reward. Good debt is something completely different. This type of debt allows you to purchase assets which will put money in your account long after you make the purchase.
For example, purchasing a piece of equipment for your small business is a good debt investment. The rise of franchise opportunities nationally makes this probably the most common example when discussing what is involved in good debt investment. The equipment will help you do your business more quickly, which can lead to faster profits. Even though you are going into debt to purchase it, it will pay off in the long run.
Another example of good debt is investment in property. Buying a house is probably the most amount of debt that the average person will carry in their lifetime. But a mortgage loan can allow you to earn money in the future. If you purchase a house for $180,000 and it is worth $250,000 in five years, your debt has actually allowed you to make money. Good debt investments can also include stocks, shares, coffee franchises, restaurant franchises, art and even rare comic collectible items. Read the rest of this entry »
Managing debt can seem like quite the task to take on. Many people don’t even know where to begin. Oftentimes, when things seem like are at their worst, people can start feeling like there’s no way to bounce back financially. However, I’ve come up with four tips that can help anyone manage their debt more successfully.
1. Be Organized - A lack of organization could have lead to you being in debt in the first place. That being said, once you’re in debt, organization is quintessential to debt management. Utilizing calendars, planners, organizers, or anything else that will help you make payments on time can be a tremendous help. Additionally, keeping track of paychecks, and keeping strict accounts is also very beneficial. The key to any type of management is organization, and it’s no different with debts.
2. Seek Help If Needed - When trying to manage debt, too many people think they can get through it all by themselves. It never hurts to seek advice from people who have been through things before. Also, if things are bad enough, professional financial help can also be very beneficial. A lot of people find debt consolidation to be extremely effect when trying to manage debt. Remember to not go into anything too hastily, and always read the fine print. Those who are too proud to seek help with their debt management, even if it is needed, usually have further financial difficulties.
3. If Possible, Pay Bills Online - This is my personal preference, and by all means you can continue to deal with checks if you prefer. However, I’ve found that paying bills online can sometimes be much easier, and can help avoid late fees. Whereas with checks, you have to make sure they are in the mail a few days before the due dates, you can sometimes pay bills online the same day. Also, for someone like myself, who finds computers to be a lot easier and more conducive to organization, online payments are the way to go. Rather than worry about filing countless amounts of papers, you can simply put a paperless statement in a folder.
4. Don’t Let Yourself Become Overwhelmed - Staying calm is central to any debt management. Even if the bills are piling up, if you panic, or start to lose focus, things can get much worse. Keeping a clear head and having a defined plan to get out of debt is the best thing to do. This can be accomplished with organization and any help you may feel you need. It’s tremendously difficult to stay organized if you are in panic mode constantly. So remember, just stay calm and focus on the tasks at hand.
So those may only be four tips, but they can significantly help anyone with debt management. Unfortunately, it is generally quite easy to get into debt, but very difficult to get out of debt. The main key to debt management is organization. Paying bills on time and slowly lowering one’s debts requires a significant amount of dedication. Last, but certainly not least, remember to not let yourself become overwhelmed, because that never helps solve debt worries.
Heather P. Johnson is a freelance writer, as well as a contributor for Credit Card Lowdown, a site for finding credit card reviews. Heather invites your comments and freelancing job opportunities at her GMAIL email address.
According to the Federal Reserve, Americans are drowning in debt with a record revolving credit balance of $975.2 million as of the end of 2007. This works out to around $11,000 to $12,000 in credit card debt for the average household in the United States, a pretty staggering total. Are you one of the millions of Americans struggling with debt on a monthly basis? Are you hiding it from a loved one or spouse scared of what he or she may say or just plain embarrassed? You’re not alone.
As many as one in five American households are either behind on credit card payments or possess at least one account in which they are over their limit. Living in this “penalty rate zone” of credit cards isn’t easy. But there are options available to the average consumer that can alleviate the stress of continued monthly credit delinquency. Consider the following five tips and start your journey on the road to financial security today:
Tip #1 - Consider a Budget: Do you know how much you spend each month? What is your average current credit card obligation? How many ‘essential expenses’ do you have? A car, rent or a mortgage payment, food, and loans, are considered essentials. Eating out, the new Disney movie and your local gym membership, are not essential. Track your spending and eliminate the fat, you may be shocked at your monthly savings.
Tip #2 - Cut up your Credit Cards: If you have a credit card with a balance that is more then your regular monthly salary, that’s a problem. Consider cutting up the card completely or putting it completely out of reach for the time being. Are you making the minimum payment? If so, that goes completely to interest and won’t move your outstanding balance much at all. Make sure you check out our free credit card calculator and see what increasing your monthly payment will mean to your future financial security.
Tip #3 - Debt Management Plans: It’s not easy to ask for help from any debt management or credit counseling company. But it may be the smartest decision you ever make. If you are over $3000 in credit card debt and need that debt paid off faster and cheaper then you ever thought possible, this may be the option for you. Read our detailed information on what is debt management and see if it may be right for you. Read the rest of this entry »