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How to Tell the Difference Between Good and Bad Debt
Alright, let’s start off by saying that no debt is good debt. There are just some debts that are better then others to have hanging around. You need to make sure that you know the difference between that good debt and that bad debt. This is not as difficult as it might seem and it could save you a lot of trouble when you are looking to eliminate your debt problems. The following are some of the main ways that you can judge what is going on with your debt. Put yourself in a position where you are able to succeed at fighting off debt. It is your time to do so, so make sure that the time that you spend is not being wasted.
Interest Rates Can Judge
Interests rates are a good judge of the troubles you might be having. If you are facing debt with a high interest rate then it is not very good. If you are facing debt with a lower interest rate then you do not have to worry about it as much. Interest rate adds onto the debt that you already have. Obviously the higher rate will add money at a quicker pace. That is why a lot of people choose to eliminate the debts with the higher interest rates first. If this is what will work for you then you should go through with it in this order.
Uses of the Money That Caused Debt
Another judge is how you use that money that caused debt. If you used the money on student loans then you are getting a high return for your money. An education is great and it is a smart thing to use your money on. You will get a better job because of it. If you just used your money on your credit cards and that is your debt then you are not as well off. Credit cards have a high interest rate and they do not benefit you much, other than the material goods that you buy. Too many credit cards is a poor way to use your money.
Length Debt Has Been Around
Finally, you need to know how long your debt has been around. If you just started getting into debt then you are at the beginning stages and do not have much to worry about at this time. If you have debt that has been around for a long time then you are going to be facing debt collectors soon. This is something that is not fun to face. Be prepared for collectors. This is why it might be a smart move to fight off your oldest debt first. Facing off against collectors is never something that any of us want to do. Take steps to fight that.
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