Monday, April 4, 2011

be smart getting into debt

The definition of debt is, “Something owed, such as money, goods, or services”.  People obtain debt by getting a loan or, “borrowing” money from an organization, which you will eventually pay back with interest.  Interest is, “An excess or bonus beyond what is expected or due”.  Therefore, the longer it takes you to pay back a loan the more interest you pay the organization on top of your loan.  So now you know what it means to be in debt, here is advice on how stay away from debt. 

In today’s society, people believe that getting a loan is not a big deal because they will just pay it back later.  What they don’t understand is that they actually have to pay the loan back, and until they do interest will keep piling up.  So what you should know is getting a loan is a HUGE deal and should be a last resort option.  First, do not buy things you cannot afford that you don’t need. If you have a credit card you know that you can spend money that you don’t have.  And if you pay it back it works out, but if you don’t it can screw you over and you will get high interest rates on the money you owe. So it isn’t worth buying things you don’t need unless you can pay your money that you have for it.  Now there are things that you need to strive and make it and sometimes it is worth getting into debt to buy them.  These three items are cars schooling and a house.  It is ridiculous when people buy brand new 20,000 dollar cars, when they are working a minimum wage job, and don’t have enough money or income to make the monthly payments for the car plus the normal cost of living.  If you are just out of or in high school you should try and buy a used car with cash money.  That way you don’t have payments to get a loan.  I can understand if you have to get a small loan to buy a used car, but make sure you have income coming in and stay on top of your payments.  The next advice is to go to college spending the least amount of money possible.  Student loans are loans set up so a student can attend a college and not pay them back till they are through with college and have a small interest’s rate.  The loans are good if you use them smart.  But there are ways to get in little to no debt in college.  Like going to a community college and live at home, staying in state because it is cheaper than going out of state.  Another is to not waste your time and money going to college if you don’t want too.  It is more worth it to wait then to go and spend a lot of money and end up failing out of college and getting nothing out of it but losing your money and possibly getting into debt. And the last is buying a house.  Buying a house is huge deal and could possibly make you be in debt for the rest of your life.  Not many people can buy a house with cash so they get a loan from a bank to buy one.  The advice I can give you is to not buy something you think will take your entire life to pay off.  Instead be smart about it and buy a house that can support you, and will be an investment in the long run and that you can possibly profit from.

So there is some simple advice to help you decrease the amount of debt you get into. And always remember any loan you get you will have to pay it back in whole plus interest for however long it takes you to pay it back.