Bringing Debts into a Marriage
Are you a credit card junkie? Credit card debt can often be a big, deep, dark secret for someone preparing for marriage. It’s an uncomfortable subject to talk about. Do you bring it up before or after he slips the engagement ring on your finger...
Choosing the Right Debt Management Service
Regardless of age many consumers are guilty of committing financial suicide. For some people juggling bills and robbing Peter to pay Paul is a vicious and endless cycle. The average American lives ten percent beyond their means. For the individual...
Debt Counseling - Don't Fall for the Scams
If you are overwhelmed and decide to seek the services of a debt counseling agency, make sure you find a good one.
Before we delve into this topic, let me say that every trade has good people and bad people. Unfortunately, some debt counseling...
How to NOT go into big debt while building your online business!
Copyright 2004 Tal Fighel Credit cards can be a great thing for the new online independent business owners who have just started their online venture. They are convenient, easy to use, and are very useful when it comes to taking those small baby...
Personal Finance - Have Consumers Had A Belly Full Of Personal Debt?
For months, we were trigger-swipe happy, putting our groceries, clothes, holidays and service charges on our credit cards. We wanted mortgages, we took out loans, we watched Property Ladder and What Not To Wear. Whether you were born middle class,...
Loans - Good Or Bad Debt?
When borrowing money it is usually because we lack the cash to make a large purchase, such as for a car, home or education. However, an important question to ask yourself when borrowing is if the purchase you would like to make is creating good debt or bad debt.
Good debt is considered borrowing for something that will go up in value over time. For example, real estate, a business or for education purposes. Education loans can be considered good debt because it should increase your income.
Bad debt is debt used to fund something that doesn't hold its value. Some examples would be car loans, personal loans for vacations and use of credit cards for consumable products.
Additionally, loans for bad debt are not generally good for your financial well-being because they usually have higher interest rates and are not tax deductible. Good debt loans on the other hand are frequently tax deductible and carry lower interest rates.
Ideally having no
bad debt is the best. However, in some cases a certain amount of bad debt may be ok and unavoidable.
Some financial professionals claim that it is acceptable for 10-20% of your annual income to consist of loans for bad debt. But, going over 25% is getting into a danger zone that may be difficult to get out of. Once you get into this high debt range, the amount of interest paid becomes so high that it results in a cycle that cannot be reversed.
So, just remember to take into consideration the type of debt (good or bad) you are incurring prior to getting a loan. This advice can go a long way toward helping you be a financially savvy borrower.