Debts: The Good, the Bad and the Ugly
Blame it on bad accounting, overspending, or just lack of money management skills but I am certain that nearly everyone has an outstanding debt or incurred one in their lifetime. In the growing need of individuals to have everything they want and need, they borrow money from various credit agencies. With just a swipe there and a signature here, one is able to purchase that exquisite Jimmy Choo’s shoes or amazing iPhone SDK even if you have only a penny in your wallet.
Nevertheless, whenever the monthly bill arrives we cringe and wish we are somebody else (or anyone other than this person who must pay this thousand dollars worth of debt). Some debts are not bad; actually they are considered as an investment. When you buy something that appreciates in value, then that debt may be a good one. Examples of good debt are home purchase and student loans.
Dichotomy between the good and the bad exist even in debts. Bad debts are credits that results to unhealthy financial situations. Bad debts occur when you purchase items that can be consumed instantaneously. Such items include everyday things like clothes, clothes or gadgets. Using credit cards to go on expensive vacation trips that you know you cannot pay back is also considered bad debt.
We heard of gloomy stories of bill collection agencies threatening people to pay their debts, and of individuals being blacklisted in credit agencies because of their bad credit history. We wouldn’t want to suffer their fate. We want to live freely and without concern or fear.
Then I advise that we must discern and be wise with our decisions. Avoid that impulsive purchases or shop-‘till-I-drop urges. You should know better than waste your life on the pit of debts and misery. Practice proper money management and spend you hard-earned money to something that is productive and long-lasting.
