Although it is possible to live completely debt-free, it is not necessarily something intelligent. If we average at the population level, there are many people who have enough money to pay cash for some of the purchases we do in our life to earn: a house, a car, education, travel, etc. One of the most important considerations when buying with a credit or a loan, if the debt is good or bad.
A good debt is an investment that will grow in the value or income on long run. An example would pay for a private school for our children. Adequate education, even if you have to pay with a credit card, the value increased to future workers and increases revenue potential in the future.
To get a mortgage on a house is usually considered good debt also. A mortgage is tax deductible when it comes to paying taxes, and although they are often long-term payments (usually over several years), payments rarely cover the full content allows a person to the rest of our money into other investments and use issues. Currently, there is the fact that a lot of people in an awkward position because of the financial crisis, the world depends happened, but nevertheless a house is a liability, in the end it will provide long-term benefits.
A car loan is also considered a good debt, especially if the vehicle is essential to your work. Unlike houses, cars and trucks lose value over time, and it also generate costs.
Bad debts are debts by buying things that quickly lose their value and do not generate revenue received in the short or long term. A bad debt also with an average of very high interest rates, such as credit cards for example. The general rule is to avoid these bad debts: If you can afford it and not need it, do not buy. If you buy a $ 300 pair of luxurious shoes with your credit card, but you have the red and difficulty in the Card Account, the shoes end up costing more than $ 300 you've spent initially because of the interest. So how do you know if you are in a good or bad way? Your money
These tips can help you: If you need a loan: consider exactly what you want with the purchase! If you invest in a new business, this is a smart debt because you make a profit of it, but be sure that when you analyze the business, you add the interest rate of the loan, to your cost.
If you plan to a bigger house to buy, think that you would have more to pay taxes for a bigger house, so think if you are spending your money smartly and if your monthly cash receipt will be enough to pay for both: the mortgage and the taxes.
The same applies to vehicles ... Produce cars cost a lot ... You can afford it? Some basic strategies for money management, you can control the finances and save for the future. Here are 5 steps to settle for families to Finance:
1 Set a budget. If you can clearly see where you spend your money, you can plan and its resources accordingly.
2 Spend wisely. Having established a budget, knowing how and where to cut spending.
3 Pay your bills on time. Keep a calendar with dates and how much should each month. Make sure you pay your bills on time to pay fines and eliminate late fees.
4 Saving for emergencies. Identify ways to save a preset monthly amount, say $ 20th With an emergency fund, you are ready for the unexpected.
5 Get out of debt. Start paying more than the minimum amount each month and try to get rid of all your debts.
And of course, if you need advice, get out of debt, you can make free online debt solution advisor. Credit Card and "Financial laxative" known in the world of personal finance. Learn to control your credit card is your responsibility. But we can free debt solution free advice....
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