Is debt good? being in debt bad? or Is it ever possible to stay debt free especially during this recession period?. Especially when every when is feeling the financial crunch? Should I get rid of my credit cards and use only cash so that I don’t get into financial problems?
I do have few credit cards and I do use those whenever I am making purchases. It is not about good credit or bad debt, it is all about managing your money. The Fundamental Guide To Avoid Falling Into a Debt Trap.
#1 When is Debt Not Bad?
Is it ever possible that debt can be good? People starting businesses, or expanding the business for making more money borrow money all the times. The idea here is to borrow money and use the loan or debt for generating an income stream. That not only lets the borrower pay the debt but also make some profits. So as long as you are paying back your debt from the money you make by investing the borrowed money.
Is it that simple then why not everyone borrowing money and making good money? Why are people declaring bankruptcy all the time? Don’t just follow other’s footsteps. If you borrow money for business for which you didn’t do any market research or proper planning, the chances are that you will fail in that business. Not only you will lose the business but also you will fall directly into the debt hole.
However, on the other hand, if you invest into ventures for which you have the passion, know-how, and experience, you have higher chances of walking onto the path of success. The key here is not to dream high especially when it comes to business projects you should always measure your pros and cons before starting new projects.