I hope to revisit this topic frequently throughout the blog but we’ll see. I’ll begin with some weekly tips I have about finance and you’ll quickly wonder how I actually got a finance degree.
Debt is not terrible and is defined as money we owe to someone else. Like for instance, Chelsea is in debt to me. She owes me $60 from Foxfields. Luckily she isn’t being charged interest like car payments or credit card companies do. Anyway, you do not want debt in things that depreciate in value, instead use debt on things that increase in value.
------Bad things to have debt on: Credit Cards and Cars
It’s much better to pay off your credit card each month and better to pay for your car in full.
------Good things to have debt on: Real Estate and You
A mortgage is a great financial tool to invest in real estate. Basically a mortgage is a big loan from a bank with a very low interest rate because the loan is secured by the house. Real estate allows you to lock in a fixed payment and pay it off over 30 years, the house will have increased in value so you’ll have successfully invested and own something you never could have paid for in a lump sum. Also the interest of a home mortgage is tax-deductible to encourage home-buying.
And finally you increase in value over time. After an education, we are worth more, so if you can’t pay for your education in full it makes sense to get debt in yourself.
So avoid debt and the interest payments as much as possible unless it involves a house or higher education.
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