We all have heard about debt. Well, it simply means owing money to someone, owed money that is past due or the feeling as if you owe someone something. For example- a debt is what you owe on your car loan or ask a friend for some money to pay your rent. Mostly credit cards causes people debt. Debt is something that has made a lot of people give up their relationships, marriages and lives because they could not repay or settle it. That was the reason debt settlement or debt consolidation came into being.
There are two kinds of debt: good and bad.
Good debt increases your net worth with time or has some sort of lasting value. Examples of good types of debt include things like a home purchase or an education. Houses generally gain value over time, and are considered to be a good investment because if you have to sell, you may get back more than you put in. Also, a college degree enables you to get a well- paying job and earn more money over the course of your life.
Bad debt, on the other hand, doesn’t provide any type of value. It includes things that you finance because you didn’t have the cash to pay for it. Unlike good debt, it doesn’t add to your net worth or have any lasting value.
When a majority of your debt is from bad debt, it suggests that you may be living beyond your means. Consider taking a clear look at your finances and create a realistic budget by which you can live. It should be one that still allows you to have a little fun, but that also helps keep you on track to pay your bills and save towards retirement.
The Consumer Financial Protection Bureau recommends you keep your debt-to-income ratio below 43%. Statistically speaking, people with debts exceeding 43% often have trouble making their monthly payments.
Signs when you are having too much debt are:
- You live paycheck to paycheck.
- You are dependent upon credit cards to make simple purchases.
- Your debt balance stays the same even after regular payments.
- You don’t have an emergency saving, and are unable to establish one.
- Your total debts total is far more than half your income.
- You’re unable to contribute to a retirement plan.
If these sound like you, it may be time to make a few changes or seek professional help, a debt settlement company which will help you settle your debts.
When debt gets out of control, it affects your everyday life. Life is not about thinking of debt, is it to enjoy your each day as your last!
For more information and articles visit our website: www.bharatdebtrelief.com