The Overall Take on Debt

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Debt is a subject under contention among many. There are those who can attest to the good that debts have done to their lives while there are others that can say nothing but the gloom debt has brought in their lives. How can this be the case?

Well, it is simple. Debt can be both good and bad. The good in debt is seen when one takes the right approach and make wise decisions in debt endeavors. The opposite is also true. When one takes the wrong approach to debts and makes unwise decisions, debts can be a source of gloom. There is very little chance that one will live without borrowing at some point. This means that all will possibly meet the good or the bad side of borrowing.

The good in debt

  1. Debts enable you to get the extra cash you needed for an emergency or a project. With debt, you are able to take care of the immediate needs at the right time. It is an extra boost in cash that can come at just the right time when the money is needed.

  2. It is possible to get debts at low interest rates. This involves shopping around on different lenders and comparing the interest rates offered. The availability of online loans has even made it easier, cheaper, and less time consuming to get loans. It has even made it possible to compare loan offers through loan comparison sites so as to get the cheapest loan offers.

  3. Debts come with a definite repayment period and even installments. This makes it easier for the borrower to budget on the loan cost and the manner the loan will be paid in advance. Preparedness when taking up the loan makes it much easier to repay the loan

Debt

The bad in debt

  1. A debt starts to become a real issue when you are unable to meet the monthly repayment charges. In such a case, you will get in trouble with the lender. This usually happens when an individual did not make a proper budget before taking up the loan. In other cases, one may have taken up a business loan but it failed to turn out as expected and the business is not able to produce funds that satisfy the loan repayment required.

  2. A borrower risks losing their properties when unable to repay a loan. If there were assets attached to a loan like cars or a house in the case of mortgages, one risk losing their investment. This also happens when a proper budget was not set. It also happens in cases where one loses their job and thus the source of income to pay for the loan.

  3. Rising interest rates is also a threat that comes with loans. At a time when the economic situation is not stable, the interest rates may rise. This also means a rise in the loan installments as well as a rise in the cost of living. It may eventually weigh down on the borrower who may struggle to pay for the loan.

  4. There are numerous risks associated with loans. In times of financial difficulties, one may be late in making loan payments. Late payments usually attract fines on the loans. This increases the loan balance and makes the borrower pay for even more at the end of the loan period.

Remember, it is impossible to cancel debt. The money you are given is never for free. It is a debt and has to be recovered. Once you have taken a debt, you are required to pay back every single penny you owe. This is why you need to be alert before signing up for a debt. Even more caution is needed in the case of credit cards and store cards. They can get you into spending without thinking of how you will pay the money back. It is important not to be sucked up by the good names and terms that are associated with the cards as this may make you fail to look at the bigger picture behind the cards which is a big account statement running in negatives.

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