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  1. 1. Debt has been a part of every bodyÂ’s life and personal debt gradient is on the rise because credit hasnÂ’t been easier to card consolidation
  2. 2. In everyday life, most of us would not have enough finances in onego when it comes to paying for our apartments or children’s collegeeducation Hence we borrow in one form or the other to get theexpenses meet Debt is not a simple concept to comprehend, but infact is a bit difficult one to get hold of Ideally, as per financialexperts’ statements, a person’s total monthly long term debtpayments – which includes credit cards and mortgage - should notexceed 36 percent of his/her gross income for a month
  3. 3. This is the bench mark mortgage bankers take in to considerationwhile appraising the creditworthiness of a potential borrower It isvery easy to spend far more than what one could afford It isinteresting and intriguing that a large number of people does exactlythis and fail to recognize that they are heading down in an abyss -the deeper you sink, the more difficult will be the chances of arecovery That is unbridled spending
  4. 4. But to avoid debt is not a smart option either If properly handled,debt can be money spinning as well That brings us to the conceptsof Good Debts and Bad Debts Let us see what are the differencesbetween good debts and bad debts? The secret of acting smart withthe money is all about learning to discern between good debt creditcard consolidation and bad debt
  5. 5. Unfortunately this is something that most people around the worldfail to be experts in Good debt is something that helps improve yourfinancial position or net worth That is, in simpler terms, a good debtincreases cash flow That is, mortgage debt, for example, is gooddebt
  6. 6. You are borrowing money from someone, but youÂ’re getting a taxadvantage so that you are able to cancel interest on an asset thatÂ’sgaining in value over time Also you can live there On the otherhand bad debt can occur when you buy something that goes down invalue immediately That is, when the thing that has been brought oncredit does not have the potential to increase its value
  7. 7. Purchase of disposable goods or durable items or, as commonlyfound, the use of higher interest credit cards can lead one into baddebts Ideally, debt-to-income ratio of a person shouldnt go above20 percent That is - while adding up all of your non-mortgage loans,credit cards and outstanding charges - it should not exceed 20% ofthe annual income If it goes beyond the 20% mark, that is bad debtand it doesnÂ’t go down well in his/her credit reports even ifpayments are made in time
  8. 8. To conclude, debts can be productive if properly and rationallyexploited It is financially draining to incur bad debts but if you couldgain more by investing the borrowed money than the interestassociated with the credit, then it is good debt which is usefulManaging oneÂ’s debt and hence the finances might need a bit ofbrain scratching
  9. 9. But it is not that enigmatic for a common man to comprehend Afterall it is no rocket technology It is all about learning to manage yourfinances! Article Tags: ,
  10. 10. credit card consolidation