How to keep your
debt under control
Borrowing money can be an essential
part of achieving your dreams, but it's important to borrow wisely and
keep your debt under control. Without discipline, it's easy to
get in over your head and end up with a bad credit rating. One
of the best ways to prevent this is to understand the difference
between good debt and bad debt.
Avoid bad debt
Debt is like cholesterol - there's a good kind and a bad kind. A prime
mistake people often make is incurring too much bad debt. Things to
avoid include:
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Carrying too
much debt on credit cards
For most people, credit cards are a daily fact of life. But it's
important to manage your use of plastic. Many people will borrow
against credit cards (don't forget, a credit card is often just a
higher-interest loan) in order to buy new clothing, electronics,
entertainment and other nice-to-have items. But this is a bad-debt
gamble.
The longer it takes you to pay off a credit-card loan, the more
interest you'll pay. If you're only able to afford making minimum
payments each month, you could end up spending hundreds, if not
thousands, in interest on relatively small purchases.
Also, make sure when you apply for a credit card that you understand
how the interest on your account is going to be charged. You may find
that interest is charged on cash withdrawals, for example, from the
date of withdrawal rather than the date the statement is due. And
watch out -- many cards with low introductory rates only have them for
a limited time, after which their rate skyrockets.
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Zero-money-down loans
it's easy to be tempted by ads that promise items for sale at "no
money down, no interest for one year." But if you can't pay off
the loan by the due date (normally 12 to 18 months) the interest rate
usually balloons, often to over 20 percent.
In the worst-case scenario, along with owing the original amount, you
may even find yourself liable for retroactive interest on all the
monthly payments you've delayed. All of a sudden, you could be faced
with a big bill for hundreds or thousands of dollars.
Be sure to read the fine print when considering such deals. And be
disciplined. Avoid spending sprees that rely on zero-money-down loans
unless you're absolutely sure you'll be able to pay off the loan when
it comes due.
Manage good
debt
Good debt is like an investment: Incurring it usually reaps a reward.
It includes such things as:
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Mortgages
A mortgage with Worldwide Capital Mortgage Corp. lets you to
purchase a home that can enable you to build equity. Not only is it a
tangible asset that you can use, but it also has the potential to
increase in value.
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Home equity loans
A home equity loan can enable you to borrow money at a lower
interest rate than an unsecured loan. It's therefore a good way to
obtain capital for such things as home improvements, which can
increase the value of your home. But remember, the loan is
secured against the value of your home. You must be careful to meet
your monthly payments or the lender could take possession of your
home.
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Student loans
A student loan fosters professional advancement and usually leads to a
higher salary and more job satisfaction.
You can maximize the
value of good debt through careful management:
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Watch interest rates and try to
lock in a low rate on a mortgage.
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Consolidate high-interest loans
into one lower monthly payment.
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Use any unexpected financial
windfall to try to eliminate bad debt.
The key is to actively work your debt. Be its master, rather
than its slave. Keeping debt under control may seem like a lot of
work, but the money you save will be well worth the effort.
Request a
debt consolidation loan with Worldwide Capital
Mortgage Corp calling toll free: 1-866-EZ-FUNDZ (393-8639)
where you can talk to a refinance expert who will offer you a large
variety of programs with the lowest rates and lowest monthly
payments, or visit our web site at
www.worldwidecapitalmortgage.com
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