Posts Tagged ‘Debt’
Why You Should Finance Investment Property Via Debt
February 21st, 2011Debt Management Manage Finance, Manage Life
December 22nd, 2010How can we get a home with no money down, bad credit and debt?
December 7th, 2010My wife and I both have bad credit, I had bankrupt. in 2001 (discharged in 2002) And I have about $25k way over due in student loans. My credit score is about 580. My wife has a credit score of around 520, she only has credit cards that were late. How can we get a home with no money down?
Investment Property Is Good Debt
July 2nd, 2010There is a lot of buzz on the web about Good Debt vs Bad Debt. The fact is, most of the baby boomers learned money matters from parents who grew up during the Great Depression. Since that time, many things have changed such as the Federal Reserve Board, insurance for deposits, checks and balances on banking procedures and since the 80s, checks and balances on Savings and Loans businesses.
If you talk to a banker, you will hear one side, if you talk to a real estate investor, you will hear another side. The point is to gather all the facts so that you can then make a wise decision concerning going into greater debt in order to have greater returns.
The old adage is true, ‘You must spend money to make money’, or consider this one, ‘Spend a dime to make a dollar.’ No one ever made money by stuffing the mattress with dollars.
Most families spend anywhere between 20% and 36% of their gross household income on mortgage and credit cards. The average U.S. Household has at least one credit card with an average balance of $9,200, according to CardWeb.com. This is when it is necessary to put that pencil to paper and budget your income. It is crucial not to spend more than you can afford to spend. Unless…
Bad Debt: is incurred on things you can’t afford and that you don’t need such as that high interest rate on your credit card that is maxed out. If you buy something that has no potential to increase in value, or goes down in value—furniture or appliances—that is bad debt.
Good Debt: can be described as that debt which occurs when you purchase something you must have but do not have the cash to acquire it. Your home is an excellent example of this. College is another example. The problem arises when your loan payments exceed your income, or more than you can comfortably afford to pay back.
Now consider this for a moment…
Good debt can also be when it is tax-deductible. If you could take out a mortgage that was more than you could afford to pay back, it would seem to be financial suicide. Except… if you take out this mortgage and the property gives you a positive return on your dollar. It means that it pays you more than what you are spending on the mortgage and other maintenance expenses. That means your money is working for you, and describes positive cash flow: an example of very good debt.
Investment properties have GREAT TAX BENEFITS. So, the decision to incur more debt for investment properties should be discussed with your tax advisor and real estate professionals.
Proper Debt Finance Management
May 15th, 2010Managing debt finance can be a frustrating battle. Most people fall into debt due to financial problems where they simply can not afford to pay for their debt. These debt problems quickly snowball and can be quite messy to clean up. Debt finance is all about trying to dig out of the mess and repairing the damaged credit.
Nobody wants to be in debt, but the majority of people are. In some cases the debt is not a problem. For example, most people are in debt if they are a home owner. This type of long term debt is usually quite easy to handle. However, many times people are in debt due to various other types of debt which is not good.
Credit cards are a big factor in debt problems. The reason is that they are so easy to use carelessly. Additionally, with such high fees and interest rates they are nearly impossible to pay down. People get easily trapped in credit card debt.
Debt management is taking control of debt and not letting it have the control. Effective debt management is having a plan.
Ideally, debt management should start before debt is incurred. Most people, though, hardly think about debt until it becomes a problem. This is why so many people struggle with debt problems.
No matter where a person starts with their debt management the first thing to do is make a monthly budget. The budget should include income, expenses and all debt. The key here is to make the monthly amount of income more than the monthly expenses.
If a person is current with all their debt and nothing is in collections or past due they can simply make their budget, adjust it as needed to lower expenses and continue making their timely debt payments. They should also practice monthly monitoring to ensure they do not end up with any problems.
If a person is not current and is having debt problems then they need to seek a solution. That is the only way to ensure that debt problems do not start to adversely affect credit. Also it can prevent legal problems or worse further financial problems.
Solutions to debt problems can be simply working debt payments into the budget or getting a consolidation loan. Either method will help to ensure the debt is getting paid and is not going to become a credit problem.
Managing debt is making sure that you do not get too much debt, while also making sure to continue to keep debts in good standing. It is essential to immediate address any problems or else they can cause serious credit damage.
Debt finance management is all about responsibility. When a person is responsible for their debts they are able to make sure they are paid according to the agreement and that they do not fall behind. They understand that should a problem arise they need to handle it and take responsibility for it. Debt finance management is something where a person must be active and maintain control or it can easily become a problem.
Credit Card Debt, Bankruptcy,& personal finance for doomers
March 17th, 2010
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