Debt Moderation Is Key To Successful Money Management
Friday, September 23, 2011, 2:00 AM | Leave Comment
As I mentioned in one of my previous posts, To Get Out Of Debt, You Must First Understand It, debt is not always bad. There are different kinds of debt and good debt is one of them.
Let’s examine some of the things that many of us have gone through one way or another to stay in debt or be debt free.
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Mind boggling debt
Many Americans are struggling to control their debt and manage their personal finances more efficiently. Consider the following statistics:
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40% of credit card users pay off their balance in full each month.
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Whereas 60% carry a balance of between $12,000 and $17,000.
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70% of homeowners currently have a mortgage.
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22% of these homeowners also carry either a second mortgage or a home equity loan.
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The average American spends roughly 10% more than he/she earns per year. That 10% is their debt per year.
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The percentage of people in the United States seeking the help of a credit counselor doubled in 10 years from 1990 to 2000.
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Close to 90% of couples who divorce say arguments over finances were a significant factor in the end of their marriage.
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Debt-free living
Different folks might mean differently when they talk about debt-free living. For some, debt-free living simply means life without any credit card debt. For others, it’s about having no mortgage, car payments, student loans, or debt of any kind.
It’s your mindset that follows you around what to believe and, in turn, what to spend on and how much to spend.
It’s usually one of the following cases:
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Maybe some folks had bankruptcy declared in their lives and now they are more cautious and mindful about it.
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They look at other people who are debt free and they follow their suit – highly unlikely, but some do follow the Jones’ to do good.
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Some are obsessed and worried about how they would live in retirement and they have tried all their lives to be debt free.
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Believe it or not, some folks believe that they simply don’t need anything they can’t afford to buy outright. Well, I am one of them.
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Good debt
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As long as you pay off in full your credit card debt by the due date every month, debt can be good. It can do wonders and can play a big part in your happiness and livelihood.
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Bad debt is, as an example, when you can barely ends meet, and you go on a vacation you charge to your credit card. It, then, takes you months and months, if not years, to pay off that loan.
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Good debt is you take out a loan for, let’s say, to go to college to enhance your career, get a better paying job. You, then, pay it off with the extra money you get in your paycheck.
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With good debt, you can build your credit history. Even if you don’t need the money, and you want to have a better credit ratings, borrow and then pay it off.
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In a Nutshell
As with many other things in life, moderation is the key to successful money management.
