Debt is not a bad thing, if used well it’s a good investment. It will allow you to increase your earnings and be better off financially in the long term.
Bad debt is debt incurred to purchase things that quickly lose their value and do not generate long-term income. This would be taking up loans for consumption or going out with friends.
The first step to managing debt is by knowing Who & How Much You Owe. Make a list of your debts, total amount of the debt, monthly payment & the due date.
Debt is an amount of money borrowed by one party from another. It is used by many as a method of making large purchases or paying for school that one could not afford under normal circumstances.
Borrowing a loan to repay another loan is a bad habit that will lead to default, low credit score and a vicious debt cycle
Good debt is an investment that will grow in value or generate long-term income. An education for a college education is the perfect example of good debt. First of all, student loans typically having low interest rate compared to other types of debt.
It is important to budget on how to repay your debts to avoid spending more money on debt interest than you’d earn on your savings investment.
Onlinecash Financial Tips
A) In order to keep check of your finances use the Budgeting Rule of 50/30/20:
Keep essential expenses to 50% of your income. Then allocate 30% for things you want & use 20% for paying back any loans & saving
As you set financial goals, you need to understand the difference between your wants and needs. Set a budget, a plan of how you save, spend and invest your money
A financial goal is an objective which is based upon money. An example would be debt reduction, savings etc.
B) In setting up your financial goals, you should ensure that your goals are specific, measurable, attainable, realistic and can be done within a specific time period
C) The first tip of saving is to have a specific goal that will help in maintaining your momentum. Think about what you want to accomplish with saving, both in the short- & long-term.
D) When taking a loan; make sure its for a purposeful use such as business/school. In no circumstances should you borrow a loan for consumption or gambling.
E) Savings is not just about putting money aside. It should be money kept aside with an agenda so as to help you maintain a disciplined savings culture.
F) Put away any extra money like gift money, refunds, or bonuses instead of spending it on unnecessary things.
G) Pay yourself first- consider savings as a “bill” and put a specified amount into your saving account each month.