Bankruptcy & Foreclosures

When it comes to debt, there are many types that are bad for you and your financial situation. At the same time, there are types that can be considered “good debt.” It is important to know all the details surrounding your situation, no matter where you stand. For some, credit card debt is just about as bad as it gets. Do you feel this way?

Why is credit card debt so bad? For one, the interest rate attached to it is usually high. Even if you received a low introductory rate this is not going to last forever. At some point things are going to adjust and you will find yourself paying more in finance charges.

Also, credit card debt is not something that you need. For instance, a student loan is good debt because you may not have a choice. On top of that, you are getting something good in return – your education. With credit card debt the same cannot be said. Instead, you put yourself in a bad spot and the only way out is to payoff your balance as quickly as possible.

If you are facing credit card debt the only thing you can do is begin to pay on your balance. How fast you get rid of your debt depends on many factors including how much you owe, how much you pay each month, and your interest rate.

In short, credit card debt is usually not a good thing. In a dream world, you will be able to pay off your balance each month. Is this doable? Or will it take several months to get rid of your debt? 

There are some people who are scared to even hear the word “debt.” Does this sound like you? This is actually a good thing. If you are aware of what debt can do to your finances you will probably do your best to avoid any issues. That being said, most people realize soon enough that they have to take on debt if they are going to advance their life. For instance, everything from buying a home to going to college can often time result in debt. Are you willing to get past your fear?

Believe it or not, not all debt is a bad thing. You do not want to take this the wrong way, though. You should realize that some debt is good while some is bad. For instance, taking out student loans will lead you to a better education and hopefully a larger paycheck in the near future. Since you are getting your college education in return, going into debt is not such a bad thing.

But what about other types of debt – such as credit cards? This is when you should get scared. Simply put, credit card debt is not something you need. You may think there is nothing wrong with this while you are spending money, but when the bill comes due you are going to feel differently. Not only can credit card debt hurt you now, but too much will ensure a long payoff process.

It is a good idea to be cautious when taking on any type of debt. Just make sure you are not so scared that you hold yourself back from enjoying life. 

Paying off debt is all about making progress. If you continually get rid of debt, month after month, it will eventually go away. Of course, adding new debt while paying off old bills is counterproductive. Those who are making progress with paying down their debt have a plan. Those who just “wing it” usually find that their debt management plan is not nearly as sound.

To know what type of progress you are making it is important to have a plan. And not only do you need a plan, you must follow it from start to finish. Anybody can put together a debt management plan and a budget, but when it comes down to it you have to be willing to stay on track no matter what happens.

A simple spreadsheet or notebook can show you if you are making any progress in terms of debt management and payoff. To start, you need to write down your total debt. For instance, $10k. At the end of each month, after paying your bills, calculate your balance. Hopefully it is less than what you started with. If it is, you are making progress. If your debt balance is now higher it means that you added to it during the past month – this is not a good thing, and will greatly stunt your progress.

If you are not making any progress, or have no clue where you stand, now is the time to put together a solid debt management plan. Your plan will help you stay on track, and eventually get rid of all your debt. Sounds simple enough, right?