No matter who you are or where you live, chances are you’re in debt, either from mounting credit cards, personal loans, student loans or all the above. However, despite debts bad reputation, not all debt is bad. In fact living a completely debt free life is not good either.
If managed correctly debt can be very beneficial to acquiring a sound financial plan. But, differentiating between the two can be tricky. Due to a lack of financial education, most people are unaware of purchases that are worth getting into debt for and others that are not. We at Quick Credit want to help you make better more informed and responsible decisions when it comes to your credit purchases.
Good debt defined
Debt, for most people, is unavoidable, and many of us are stunted by our crippling debt. However, there are ways to use debt to our own advantage. “It takes money to make money” is the best way to understand what ‘good’ debt is. It is money borrowed for investments that grow in value or generate a long-term income over time. An investment that will not negatively impact your current financial situation but rather benefit it.
Purchases Such as;
Loans for education are like the poster child for safe credit debt. They are a prime example of an investment that adds extensive value to your future. By advancing your career or furthering your education you increase your employment possibilities – which increases your chance of a suitable and stable income.
Property Loans and Investments
Property investments are also renowned for their good debt reputation. Making them one of the most popular investments for good debt. Unlike other forms of credit, property investments have low-interest rates and an interest that is tax deductible. Property is one of the best investments you can make because unlike cars houses increase in market value over time, guaranteeing you make a return on your investment – or at least enough to cancel out the interest you paid.
Home Equity Loans
Home equity loans are considered ‘better’ debt as they are neither bad nor good. A home equity loan may be a smart alternative way to consolidate multiple debt payments but be sure that you have carefully considered whether you will make your payments each month. If not you might be at risk of losing your home as creditors use your house as collateral.
Don’t forget to look for opportunities that you might not have yet considered because you’re scared of the mounting debt. When making future financial plans and how you intend to fund them it’s important to check whether the debt accumulated is good or bad. If the latter, try to find different ways to reach your goals. You can take the loan with more confidence, knowing that it will actually make you money in the long run. Take a look at tailor-made loans and reach your financial goals today.