Taking Control Of Your Debt

If you are not in debt of some kind, you’re unusual. For most Americans today, debt is a part of daily life. Using a credit card, borrowing for college, applying for a mortgage to buy a house taking on debts such as these may well be the first experience many of us have with a financial institution. All the more reason to understand and master the do’s and don’ts of debt. Until you know how to manage debt, it’s almost impossible to save, invest, or build an intimate financial relationship with a life partner based on anything resembling a strong foundation. Until your debt is in control and part of your life plan, you will not achieve financial freedom.

For many of us, credit card debt is a special trouble spot. To put it bluntly, credit card companies are in the business of separating us from our money. They tempt us with monthly offers of “pre-approved” cards and, once we’ve accepted their offers and accumulated a little debt, they know how to lure us into trouble. To take just one example: If you’re susceptible to overspending with your credit cards, you may have noticed that just when your “available credit” limit is reaching zero, a credit card company will raise it. “What a thoughtful company,” you tell yourself you may forget that you are paying 11 percent, 15 percent, 20 percent, or more for the privilege of using the company’s money. Most of that is pure profit for the company

Think of credit card debt—in fact, any Debt based on overspending as a as unwanted extra baggage. It weighs on your spirits, occupies your mind, and backs you into a corner. At worst, it can bankrupt you.

To get control of your money your first goal should be to get and remain free of debt. No matter the size or the variety of debt, bottom line is that debt is always manageable and debt solutions are at hand.
There are many resources for you to draw upon as you work yourself free of debt: agencies to help you break troublesome spending patterns, overcome your debt, and regain control of your finances and your life; counselors and loved ones to support you emotionally; and information, in books and online, to empower you with knowledge. There is much you can do before you reach the “last resort” of declaring bankruptcy, but even if you find yourself in that unenviable position, it is always possible to begin again with a clean slate and put better money managing practices at work.
 

Good Debt, Bad Debt, whats in a name?

A name by any other name is not just as sweet when it comes to debt.Debt has a time and a place in all our lives. But the debt you take on must be in alignment with the goals you’ve set for yourself do you want to pursue a dream of attending college, for example? Then a student loan that will help finance your college tuition is “good debt.” What about the mortgage you’re carrying on the house you live in, assuming that the house is not beyond your means? That’s good debt, too, because it enables you to share in the benefits of home ownership and to maintain a safe haven for yourself and your family. What about the loan you took two years ago to help your parents through a rough financial patch or a health scare? Or the car loan you’ve applied for, assuming you need a car and can afford the payments? In my opinion, all these loan situations are good, worthy, and in alignment with sound goals.

On the other hand, overspending with credit cards to accumulate new clothes or furniture, or to keep pace with your friends’ spending, is negative debt. It sacrifices tomorrow’s needs to today’s desires. With the exception of your mortgage and a few other kinds of “good” debt mentioned above, if you can’t pay off everything you owe right this minute whether it’s a personal loan or a $3,000 credit card balance you’re most likely in trouble with debt. I know this sounds extreme, but never the less it's wise to keep this in mind when charging that pair of jeans or the latest electronic gadget must have. Everyone who has massive debt today started with a small balance and monthly payments he or she believed were manageable. But debt is cumulative and habit forming. Before you know it, you owe more than you can comfortably handle. Wouldn't you sleep better at night knowing you could pay your credit card bills in full at the end of every month.

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