Wednesday, February 18, 2015

Taking Care with Personal Finance - Avoiding Debt

Not all debt a person takes on is bad. But most personal debt should be avoided or reduced in amount.

Some debt makes a fair amount of sense - borrowing for college, a new house, perhaps a car, perhaps setting up your life after college. But those expenses should be reduced.

College is actually still a good investment according to many studies: The Time to Payback the Investment in a College Education in the USA Today is Nearly as Low as Ever – Surprisingly, Looking at the Value of Different College Degrees, Engineering Graduates Earned a Return on Their Investment In Education of 21%. But that doesn't mean huge debt for college is wise. Being careful to find cost friendly good schools is wise.

The same advice holds for a new car, house, etc. - an evaluation of your situation may show taking on debt is sensible but if so keep the debt level low. Credit card debt should not be taken on. If you want to buy new things, save up the money and pay.

One big problem that gets people in trouble is unexpected expense. That is why an emergency fund to pay those expenses is so important. Instead of going into debt, you just use the money you saved for such a situation. Proper insurance is also important (in the USA health insurance is critical - in most other rich countries health insurance is largely taken care of).

If you get into to much debt and then can't pay off your debts things become dangerous. Companies like Intelligent Banking Solutions provide those holding debt technology based solutions that will allow them to collect the money they are owed. Quickly realizing your situation and contacting those places you owe money to, to work something out may not be easy but it is your wisest course of action.

Most companies owed debt are going to be reasonable and not be obnoxious. But if they are obnoxious (or you just want help) find free debt counseling - this can be tricky and various companies seek to take advantage of people in trouble and setup companies that pretend to help those in debt (even setting them up as non-profits etc.). You have to be careful to find a reputable organization to help with your debt problems but doing so is possible and they will help a great deal.

Once you get your finances cleaned up, which is likely going to be a long process, put your finances in order to make sure you don't get back into the same mess again.

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