Debt is good (sometimes).
Of course the best kind of debt is the kind you could afford to pay off in a single month. Borrowing money (revolving or fixed terms) is a way of life for most consumerist mentality purchases. Because most of these type purchases are made on credit cards, revolving debt like credit card debt gets a bad wrap. But the truth is that credit cards are a very important tool, when used correctly, for most individuals and their families.
Most individuals couldn’t afford to pay for life’s larger expenses with cash. And while investing in a home, your health, or education is oftentimes a great investment, consumerism and excessive holiday shopping are not.
Good Debt vs. Bad Debt
There can be a lot of questions about debt.
Generally speaking, good debt refers to debt that helps you generate income, build value and improve your overall health. Using debt in this way, if budgeted appropriately, can improve you or your family’s life in a significant way.
When it comes to borrowing money for your own business, be sure to create a very realistic (possibly slightly pessimistic) budget and plan before spending a dollar on credit. Keep in mind, when it comes to education, it’s best to only take out loans equal to the first year working in your field once you graduate.
Medical debt is another issue as well. It’s no surprise that the cost of healthcare in the US, even with insurance, can be high. If there is a medical emergency, for example, it becomes hard to mitigate the costs of any procedures. You can call the insurance companies after being billed to see if there is any way to reduce costs or have better payment options if necessary. As well, if you get the chance, researching procedures and options beforehand helps you know what anticipated costs are and budget accordingly.
Bad debt is easy to identify. It includes money you borrow for depreciating assets. If the item that you purchase doesn’t go up in value, generate income for you, or resolve a personal/family emergency then it’s best to avoid going into debt for it. Typical bad debts include entertainment, excessive clothing, décor, and other.
Not all debt is created equal. We understand that. Consider taking advantage of our offer for a free debt review, where we can provide you with a pressure free quote for a single affordable low monthly payment on your combined debts. We can give you the information that you need to decide if a debt program is right for you. As an added bonus, most of our debt programs can reduce or eliminate the interest that you’re paying on your revolving debt account. Contact our debt relief experts to take back control and make good with your debts.