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Personal Finance: 5 Important Things to Know About Debt

personal finance

Debt is seen by many people to be a bad thing.

If you are in debt, you get included in statistics that highlight why the country is struggling under a mountain of personal finance.

However, the good news is that debt is just like chocolate, wine and food – it’s okay in moderation.

Here are 5 things that everyone ought to know about debt, debt management and debt elimination.

It might make you feel better about your current situation. 

1. Sometimes Debt is Necessary

Borrowing money is sometimes needed to be able to access money you need for certain things.

Most people would not be able to afford a house or a car without some form of debt. Debt can even open doors for you.

If you have a car, you have access to jobs in locations outside of your own town and this extra potential could mean a better career and better prospects.

2. It Pays to Overpay

Wherever possible, you should strive to overpay on your debts.

This is a way to rapidly accelerate your debt elimination and reduces the amount of interest you pay.

This means you pay more of your actual debt off and will help you to get debt free in the half the time it would if you only made the standard payment.

3. You Can Always Find More Money

I know that many people struggle to pay off their debts and find it difficult to manage every month.

The good news is that there are always ways to pay off more of your debt.

A budget that ruthlessly cuts out expenses like Starbucks coffee, takeaways and frivolous items could result in $10-30 more money in your pocket each week.

Working two hours on a side job in the evenings could also net you $300-500 a month in supplemental income as well.

4. There are Options if You Struggle

From reduced payments or payment holidays to properly managed debt management plans or even insolvency, there are options to relieve the burden of debt.

If you are still struggling after trying the above, seek comfort from friends and family and professional advice from a financial advisor.

5. There are Multiple Other Ways to Eliminate Debt

Consolidating your debts in one payment might make it more manageable and help you get rid of high interest credit cards.

Alternatively, paying off your high interest debts quicker than your low interest ones can also save you a lot of money.

Whichever option you choose, always do your research beforehand to make sure you know the advantages and disadvantages of each choice.

That way, you’ll be able to pick the best option for your own personal situation.

What is your personal opinion on debt and living debt free?

Do you think that having a certain amount of debt is good for your personal finance?

Please join our discussion.  Pin It


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