Scheming with Debt

Scheming with Debt
In modern times it turns out that the more sophisticated also affect a person's behavior in managing finances, more specifically, in terms of spending money.

When the first people tend to be reluctant to shop beyond their financial capabilities, now with the convenience and facilities provided by banks and financial institutions to make people easily buy an item even have a way to repay the debt and payment.

Purchase items like this are like a double-edged sword. If not used then we cannot or difficult to have the things we want, while if we fall asleep and continue to use it then it will keep us stuck in the vortex of debt.

Before deciding to get into debt, we should first calculate with our financial capabilities. To ensure that our financial condition is not compromised, it is recommended that we take the debt limit by up to 30 percent of the total value of our assets and wealth. Or we can also limit the mortgage debt so that we do not pay more than 30 percent of our monthly income.

This is the total number of all the debt and payments that we take whether it's a home mortgage loan, motor vehicle, or credit card. So if your debt percentage is approaching 30 percent, do not add new debt again, but pay off the existing first.

There are times when we have multiple debts and credits are running concurrently, such as home loans, credit cards, as well as motor vehicles. Over time, when we have more sustenance and want to pay off some debts direct us, which is chosen to be repaid?

If the funds available are not sufficient to pay off all the existing debts, then choose to pay off the debts that charge the highest interest first. This we do to reduce the potential for a larger debt out if we continue to pay for it. Debt such as unsecured loans and credit cards usually charge relatively higher interest than other debt. So they made the first priority to be repaid first.

Motor vehicle be it a car or motorcycle is also a priority to be repaid first, because the nature of the price of the goods that will surely depreciate aka price declines each year.

Mortgages could be the last priority to be repaid, because the nature of home prices tend to always go up, so in addition to the debt burden, the house can increase the value of our assets and wealth as well. Because in addition to consumer goods, on the other hand there are also debt that can be valuable productive, meaning that when we owe not only add to the burden of our debt repayments, but can also be a source of income.

Motor vehicle installment we could also turn out to be productive debt if we can use it to be a source of income, such as a used car business shuttle schoolchildren, or used for while we go to work. There are also people who have capital to buy a second home down payment, but the house is not occupied but leased to others. That's what makes the debt characteristic is productive, because although still pay in installments but the installment is not paid out of your own pocket, but we can make it pay its own mortgage.

Congratulations to manage your debt.

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