Dangers of Debt
Why you should eliminate debtDebt (noun): a liability or obligation to pay or render something.
Debt is a form of modern bondage, packaged cleverly by bankers as a way to convince people to consume more. The only good debt is no debt. If you use a credit card (good for miles - see free flights with miles), pay it off at the end of every month. In my opinion, the only forms of debt which can be beneficial if used wisely are: 1) Buying a house with rental income (which you can also rent out or house swap when you want to travel). 2) Some (but not all forms) of secondary education. Principles to adhere to with debt: -First, avoid it if at all possible. -Second, pay it off as rapidly as possible. Make extra principal payments as your budget allows. Pass on dinners out with friends occasionally and put that $100 towards your mortgage or credit card bill. -Third, lock in low interest rates: If you have high-interest rate debt (anything above 5%) look to refinance, but be careful not to reset your terms. DETERMINE WHAT IS TRULY NECESSARY But debt is too often used as a means to obtain what we can't afford, and often don't need. (Examples: flash vacation, new car, expensive gifts, vacation home). If you can't afford to pay cash for these things (or at the end of the month if you charge it) don't buy it. Simple. NEED HELP? ASK. |
Examples of interest pitfalls$250,000 house with no renters
How a $10k "dream" vacation is $12.5k
How a $100,000 education is $171,943
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