US citizens have debts of over a trillion dollars at the moment.
A good debt has noticeable differences from a bad one, so you should figure out how to distinguish one from another, especially if you do not want to have a bad debt. Debt doesn’t sound very good anyway, but in fact, there are debts that increase your chances of good rating in the future, and will help you to avoid bad credit history.
When you take a loan that you are able to repay and make timely payments, you have a positive effect on your credit rating and your credit history. Without a long and positive credit history, your credit score will not grow.
A high credit rating will allow you to rely on large loan amounts with the best conditions, and in general, your financial capabilities will increase significantly. This is called a good debt. We will help you get a more successful future.
Bad debts will not help you improve your future prospects, they only aggravate the problem of your situation and complicate your life. They do not have a positive effect on your future, but you will have to pay.
Often people give into an impulsive desire to buy some items, such as clothes, spend time in expensive restaurant or spend money on entertainment that will not bring any benefits in the future, but will only eat up your money irretrievably.
This can be called a bad debt, if at the same time you use borrowed money. In this case, you simply create a debt, unlike to a purchase of a home or business investment.
To avoid unnecessary debts, we offer a selection of rules that you can follow to control your debts and manage your finances very effectively, despite the situations in life that you will meet on your way.
Live at a price you can afford
If you do not control your spending and spend more than you can pay, then your finances will sooner or later suffer and go to a minus. Even if this is not immediately apparent, then after a short period of time this will not manifest itself in the best way for you.
The moment will come when you will no longer be able to pay your loans, because payments will exceed your ability to repay debts on credit cards, or payments on other loans monthly. When you start to skip payments, your debt will gradually increase and you will be face to face with a big problem.
Use credit wisely
Credits can sometimes seem like easy additional money, but in reality they are far from free and cost real money. Imagine that you are buying a ticket to get to an event. You are already there and feel natural, but you have already paid to be there, so you do not take your stay there for granted.
Similarly, you can take money on a credit card, but it is worth remembering that you will need to return not only this amount, but in addition to this you must pay interest rate and, probably, some other payments.
It is worth taking and using credit money as possibility for making the necessary payments and purchases, which in future could bring you a profit and which you could not afford without a loan, that is, as a tool that you use when there are no other options.
Set up automatic payments
It is sometimes difficult to remember everything in order to make the necessary payments in time or to set aside a part of the income for savings.
Savings in the future can provide you with invaluable assistance and eliminate the need to find money in case of sudden need. Remember, using your own savings makes it possible to solve your problem cheaper, because using them you don’t pay the interest rate to the lender.
So, setting up automatic payments, you will not forget about the necessary payments, nor about the need to save a certain amount, which will help you in the future.
When your temporary financial difficulties are delayed, you need to take action. This means that the temporary difficulties are turning into a system, and why do you need a permanent financial deficiency? It’s time to change your position. Perhaps it is time to find another source of income, or expand the possibilities of the existing one.
Finding a new job is quite possible, but you can also try to get a promotion at the existing one. In addition to your regular job, you may find part-time job in order to improve your financial situation. The main thing is to reduce the share of bad debts in your total debt.
Create your own good financial habits so that your finances are in order. With small steps in a few months you can create a solid foundation for a successful financial future for yourself, if you move in the right direction.
Read our blog and you will learn a lot of useful information about personal finance and credit, which will help you get out of difficult situations. Ask our experts questions and get advice on how to improve your financial life and then keep it under control.