FMOOD 0183: Is Debt Good or Bad?
Is debt good or bad? It's a question that many of us ask ourselves while we are in the process of getting out of debt. Good debt is usually considered to be mortgages or other debt products that have to do with investments or assets. Bad debt it typically associated with consumerism, such as credit cards, car loans, and personal loans. I think it goes beyond that, though. I think we need to base the question on who you are as an individual. Are you someone who goes shopping as soon as you get a credit card in your hand? If so, and you lack self-control, it may be best for you to pay off debt entirely, close your accounts, cut up your cards, and swear off debt forever. However, if you're someone who rarely uses credit cards, you could potentially pay off or pay down your debt and continue using credit cards and other debt products responsibly and without problems. The reason to consider asking yourself this and delving deeper into your spending habits as an individual is because your credit score will likely be improved if you pay down your card balances and keep the accounts open afterwards. Credit scores have more to do with than just a means for obtaining credit. Credit scores are often used for determining insurance rates, whether or not you can rent, and even where you work if a potential employer uses a credit score and history as a determining factor of your employment. So make a plan based on who you are as an individual. Don't feel that you need to follow a cookie-cutter approach to personal finance. Think outside of the box, determine the best plan for you, and execute on that individual plan and see how quickly you'll be successful with it. The reason why this will work is because it's your own. If you know someone who may benefit from this show, please feel free to share it by sending them to http://followmeoutofdebt.com. If you're on Twitter, follow me at @fmoodpodcast for all of the latest tips, updates, and strategies to get out of debt and get into prosperity.