Is Debt Always a Bad Thing?
Debt is not an ideal situation, but is it always a bad thing?
The goal of living debt-free is ideal, but most Americans have some sort of debt, and when it comes to retirees, over 80 percent of Baby Boomers have debts to pay off.
83 percent of Americans have at least one credit card that they can use to buy things with or use to pay for services. The average American has at least 3 credit cards! The average amount of debt that is owed on credit cards per individual stands at over $5300 in 2019.
Having debt doesn’t necessarily have to be a bad thing if it is controlled and you pay the monthly amount on time, every month. Being able to pay off your debt increases your credit score or credit rating. It creates a track record as a borrower and shows the lending institutions that you are reliable and a good candidate for a loan – be it a mortgage, a car loan, or money for college. And the better your credit rating, the lower the interest rate you’ll be charged.
So debt can be a useful tool to get ahead in life, but it must be managed correctly. Never borrow more than you can easily pay, and be sure to get all the information about the repayment process and all the fine print. It’s very important to know the APR or Annual Percentage Rate. This will affect the amount that you will have to pay back over the time of the loan.
Debt can be something that can be life-changing in a positive or negative way. Mishandle it and you could be facing disaster.
Keeping track of your debts and payment schedule, as well as your credit score is essential. There are tools online that can help you do this.
.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.