Getting a handle on your personal finance isn’t only about paying your bills on time and saving your cash. Just as important is your view on debt. And while some may argue that debt is simply a way of life, many experts think otherwise.
Granted, most people take out mortgages to buy a house, as this is sometimes the only way to realize the dream of homeownership. And it’s normal to apply for loans when buying other things, such as cars, boats and motorcycles. But the fact that you need to borrow from time-to-time doesn’t suggest being irresponsible.
Yes, it’s possible to have too much debt, and falling into this pattern not only affects your present, but also your future.
If you’re weighing your future educational plans, take a look at this life insurance guide, as well as the following debt tips…
1. Be careful with student loans.
College is an investment in your future, and many lump student loans in the category of good debt. Although I agree with this viewpoint, I also feel that it’s important to borrow intelligently.
College can get expensive quick, and when you aren’t paying for your education out-of-pocket, it’s easy to forget about the debt. Some students take courses unnecessarily just because and repeatedly change their majors, extending the length of their college career and increasing their debt load.
For college debt to make sense, make sure that you’re only borrowing what you need. If possible, pay for some of your education (or your kid’s education) out-of-pocket. This lowers how much you owe upon graduation.
Once you’re out of school, see if you can qualify for government student loan forgiveness programs or forgiveness programs offered by private employers. Programs vary by organization, but typically, if you work in the area of public service for a predetermined length of time, you can have all or a portion of your student debt forgiven.
2. Use credit cards smartly
Hey, if you’re interested in earning reward points and saving money on future purchases, credit cards are the way to go. Just make sure you pay your balance off each month. With a credit card, you don’t have to carry cash or track debit card transactions. And if you use a credit card to buy business supplies, it’s easier to track these expenses. However, don’t lose your focus. Buying things you cannot afford and carrying a balance from month to month is a fast way to get into trouble.
3. Protect your family
Don’t think that your consumer debt is only your problem. Unfortunately death isn’t an escape from consumer debt. If you were to die with balances, your creditors will contact your family. Your family shouldn’t have to worry about righting your wrongs. For this reason, make sure you prepare for your untimely death. A simplified issue life insurance policy that replaces your income and provides adequate funds to eliminate your debt is the best gift you can give your family.
Debt is an ugly little word that nobody likes to think about. But it’s a reality, and if you’re looking to get a firm hold on your finances, it’s important that you make moves to erase the debt you have, and think twice before taking on additional expenses.