How do you Decide what to do about your Debt

What is the best way to handle debt? Debt is what happens when you owe somebody money. There is good debt, and there is also bad debt. How you determine what is good debt and what is bad debt is by simply determining if you need to be in debt, or if you can repay the debt that you owe. However, this question isn’t about good debt, it is about how to handle your debt.

If the debt is a good debt, such as a student loan, or a housing payment, you should simply live with it and keep on going. Well all have to pay for school at some point, and we all have to pay to live somewhere at some point. There is no mooching off mom and dad forever, so there are some bills we have to pay because it is the adult thing to do.

If the debt is a bad debt, you should be prepared to deal with the consequences of buying something you merely wanted. A big screen TV is a bad debt in the sense of you don’t need a big screen TV, so you shouldn’t buy it unless you can afford to pay it. If you aren’t planning on making payments, you shouldn’t bother buying it.

Credit is basically performing a transaction in reverse. Instead of saving up money and paying when you purchase the item, you are given money and expected to pay over time. If you weren’t going to take the time to save up money before you bought the item, are you going to make payments after you have purchased the item?

This means that the best way to handle debt is to think of it as something that affects your life as opposed to something you just get into. Don’t buy something you cannot afford even if you can pay it off over time. Don’t buy something that you don’t need unless you have enough money to pay it off without if affecting your other obligations like housing and feeding yourself.

Debt is something we all have at some point. Cars and homes are not cheap, and it takes some help to ever hope to buy one at some point. However, you should stay within your means and make sure you aren’t going to be spending more than you can afford. If you really want to avoid debt, save up money first and keep the amount you owe as low as possible.