I frequently counsel with college students and others about debt reduction strategies and the need to establish a game plan to attack debt in the most effective and efficient way. I personally subscribe to the theory that there are two kinds of debt – good debt and bad debt. Good debt represents an investment that will ultimately pay for itself. Examples of good debt would include student loans, where you are investing in your education with a goal on getting a better job with better pay than you would had you not continued your education. All of “the experts” say that makes total sense.
Bad debt is when we buy things on credit that DON’T pay for themselves – ever! Examples of bad debt include the purchase of virtually any consumer goods and especially when using a credit card. That includes everything from that big screen TV at Best Buy to the great deal on furniture at Rooms to Go. One thing’s for sure – those things will never increase in value, and if the interest rate is high and we choose to make only minimum payments, we will be paying for them LONG after they have served their purpose.
So what to do? As I love to say: your mountain of debt is NOT insurmountable. Sure, I know it seems that way when you are looking up at such a huge sum – a huge pile of bills that seem to go on forever. But you can do it! It’s like eating an elephant. Don’t think about tackling it all at once. Nobody can. But if you create a plan and take one bite at a time, you will be amazed at how soon you can reach your goal.
Don’t believe me? Then check this out. You can do it! Debt Management