Debt Management Strategies
The ability to borrow money when it’s needed on favorable terms is a privilege, earned only by carefully managing your debt obligations.
Many financial professionals regard borrowing money as a double-edged sword. For example, it could be used to finance long-term goals, such as home ownership, starting a business, or funding an education. Over time, these programs tend to increase in value and return far more than the cost to purchase them. Used in excess to constantly save for short-term consumer items, such as electronics, clothing, vacations, and so on, debt can become an overwhelming burden.
Manage your credit record. Most lending decisions are made on the basis of your credit record, also known as your credit report. Lenders size you up to determine how much credit, if any, to grant you. They take into account the following: your character; how responsibly will you handle your credit obligations; how you have repaid previous debts; and what financial assets are at your disposal to pay off your debts.
When credit is used properly, in can serve as a catalyst to our overall economy.. It helps families deal with emergency situations. It can help ease the burden of large, financial consumer purchases and can make payments more convenient and secure. It can also be used to your advantage to enlarge your opportunities and accomplish your long-term priorities.
Credit becomes debt if you don’t have the money to pay for your current purchases. There’s a difference between a debtor and a creditor. A debtor owes money with the intention to pay, while a creditor can repay right now.. There’s a price to pay for buying now and paying later, and that price is called interest.
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