Good debt, bad debt? No, not really. Debt is bad because with debt whether the interest rate is zero percent (0%) or four percent (4%) , there is RISK. Risk that you will not be able to make the payment on your new car-and it can be repossessed. Risk that you cannot make the mortgage payment and your home can be foreclosed on. You will move out of your home. When you own your car outright and owe nothing, there is no risk involved. Finance your car with your home equity and you have risked your home with a nice new shiny car.
Credit card debt is also risky, why? There is no risk of having to return the item you charged on the credit card, but risk that the credit card payment every month will take money from your food budget and house payment or car payment. It starts to stack up the cards in a way that when your house of cards begins to fall, it is destructive. If you do not pay American distress, they will call you every day, many times a day to demand money. When the card is not paid in full, the interest begins to add up and keep you in debt forever.
At large corporations there is sometimes a department called "risk management". I believe we all need that department at our budget meeting at home every month that presents it's findings so that we are aware of what we are risking. Use this strategy to consider risk BEFORE going and placing your future and your children's future in jeopardy. It could be a game changer for you.
So, debt is not a simple thing... If seventy-eight percent (78%) of people live paycheck to paycheck as statistics are showing, there is NO ROOM for error. By that I mean, not one day of work can be missed without pay or one illness that takes you out of work for a while or A GOVERNMENT SHUTDOWN.
If you need help, please seek the help of a financial coach, like me. It is not rocket science, however, sometimes we get caught up in the rat race of every day and cannot see the forest for the trees. I can sit down with you or talk with you about a better system of managing your finances. YOU DO NOT HAVE TO LIVE IN DEBT FOREVER AND SUFFER MAKING PAYMENTS TO YOUR LENDER.
GET MAD. DO SOMETHING--DO SOMETHING DIFFERENT.