Often a lot of the pressures in life are based around financial trouble, and a lot of financial trouble comes from managing to get into debt. Once burdened by large monthly repayments it becomes difficult to afford basic necessities, let alone actually managing to go and do fun activities, and on the off chance you do get out for a while often you’ll find yourself thinking about how you have to watch your spend or make a repayment the next day, or worse that you’re a few days late.
But did you know that debt is not all bad? In fact some financial analysts, business leaders and everyday people frequently espouse the benefits of good debt. They say that good debt is debt that pays you back with value, such as education or a home, while bad debt continues to lose value, like buying unnecessary items. The trick is to know the difference between good and bad debt and how to identify it and use it to your advantage.
Forbes says that good debt is money we borrow to go to school and improve our education or when we get a small business loans to set up a business, or buy much needed equipment for a current business that will generate a future stream of income. The debt is more sustainable because it’s being used to enhance future income and provide growth.
Bad debt is unnecessary or debt with unsustainable growth. This happens when we buy things we don’t need, clothes which will sit on the clothes rack, kitchenware which is interesting but we actually won’t be making all those health smoothies with. I’m looking at you, online sales, with your amazing discounts for today only, but pay day is next week so I’ll chuck it on the old credit card.
Often it comes down to being in the wrong state of mind when we’re making these kind of decisions. Too often we’re found to be using the emotional side of our brain, which is not always the most trustworthy of team mates helping to lead to bad decisions and excessive credit card bills.
It seems pretty simple then, focus on spending your debts wisely and focus on something which will give you a monetary return as opposed to superficial relief in the short term. The monetary return on your debt, which has now become an investment, will help you to pay back the debt amount, either through a better paying job thanks to a better education or through a smart business acquisition that helps to pay for itself.
Hopefully this kind of thinking helps to lead you toward a more blissfull life and don’t forget to check out all our links for more information!