Good Debt vs. Bad Debt

Living a Debt-fee life is almost impossible at this point of time when the economic situation is hurting everyone’s financial moves. Most of us are into a number of diversified loans, the most important being mortgage. Most of us when go for loans, let debt get out of their hands, which is not at all a good move. According to the financial experts, your total monthly long-term debt payments, including your mortgage and credit cards, should not exceed 36% of your gross monthly income. Bad Debt

Indeed, avoiding debt doesn’t mean that you should deplete your cash reserves for emergencies. The actual challenge is to learn which debt to go for and which debt is not making any sense, for example do not go for home renovation loan, if it is not much important at that time. Similarly, the next important skill you should learn is to manage your money wisely.

So Debt can be Good as well as Bad. It is good, if it is making sense and you are capable of making monthly payments. In other words, it is Good Debt if you are taking it for sensible need, and the payments are within your capacity.

On the other hand, Bad Debt has to do with the things you don’t actually need. So never go for non-essential debts. Especially, the worst form of debt is the credit card, since it has the highest interest rates.

Sometimes the decision to have a loan doesn’t hinge on how much cash you have but on whether there are ways to make your money work harder for you. If interest rate is low, compare what you’ll spend in interest on a loan versus what your money could earn if it were invested. If you feel you can get a higher return from investing your money than what you’ll pay in interest on a loan, borrowing a small sum at a low rate may make sense.

You might also like

Get out of debt: Credit Cards Indicate Recession is at Peak Nowadays credit cards are being used more than ever. In spite of a 41% rise in credit card debt since...
Why A Professional Debt Management Program Right For You? You will no longer get those harassing phone calls from your creditors or risk having necessary items...
Erase Debt with Credit Card Debt Settlement Imagine a situation, You have utilized all the credit limit on all of your credit cards. you are paying...
How to Negotiate Credit Card Debt Settlement Yourself? Each of us is now practically surviving on electronic money rather than paper money. The reason for...
Bad Credit Help – Debt Management All consumers require assistance if they are in debt. A debt can cause a consumer to stress out and make...
Debt Consolidation Companies

People who liked this Post also read

  • Basics of Second Mortgage
    Second mortgage is a good option for those who are facing financial problems and are in urgent need of cash amount.The major drawback of second mortgage is that borrowers are more likely to lose their home ownerships if they fail to pay off their first an...
  • FACTS to Know about Home Loan Modification Program
    If you are a financially troubled mortgage holder and find it is difficult to pay off your mortgage payments then you can take help from a home loan modification program. There are certain important facts about this programs which you should be aware of....
  • Loan with No Credit Checks
    "I have bad credit but need a loan" is on every borrower’s mouth now a day. Many organizations, lenders still offer loans with a poor credit on certain conditions. They include: doorstep lenders, pawnshops, family loans, payday stores, weekly payment stor...
  • How to Avoid Loan Sharks: High APR Lending
    Normally those people become prey to loan sharks who are financially oppressed and have been refused to acquire loan by regular borrowing sources. These loan sharks or currently known as doorstep lenders charge an exceptionally high APR which is 60% or mo...
  • The Good And Bad Of Credit Cards
    Prepaid Credit Cards have recently gained attentions of many customers; it is worth for those who are not good at handling their own expenses and budgeting. Prepaid credit cards have many advantages and disadvantages, but it is suitable and worth for reta...


is an experienced IT Consultant turned Blogger, Interested in Technology, Personal Finance, Humans and Life...You and discover more about him by following RMak on twitter.

Leave a Reply

© 2012 Loan Mortgage Credit!. All rights reserved.