This article is of the opinion of the writer and does not represent financial advice. If you get advice from a professional, see your bank manager or other financial advisor.
Debt is a dirty word….
Written by R. A. Stewart
“The borrower is a slave to the lender.” Proverbs 22:7
Those who are regular followers of my posts will have noticed one thing; that is I have never written any articles on “How to get out of debt,” “How to get credit,” “How to borrow your way to a fortune,” and the like.
There is a reason for this; that is I have never borrowed money or bought anything on credit. I would rather write about something I know about not what others are going through.
For me, writing an article advising others How to get out of debt would be just like me writing an article advising smokers how to kick their nicotine addiction because I have never smoked.
However, having said that I can give you my thoughts on the subject of borrowing and debt.
The first thing you have to understand is this;
It all has to be paid back plus the interest which means that whatever you purchase with borrowed money will always cost more than if you purchased it with cash.
The bottom line is this; “The crunch comes the day you have to pay it all back.”
There are different types of credit but the worst type is consumer credit. The credit card is the usual culprit in consumer debt.
The use of credit cards is the result of greed and selfishness. In order to qualify for a credit card one has to have a large enough income and have sufficient discretionary income to satisfy the card issuer that you are a worthy risk.
One would have thought, therefore, that if your income is such that you qualify for a card, that you would not need one in the first place.
There are some kinds of debt which are considered good debt however, and one of these is a mortgage because you have acquired an asset which can increase in value over time. Your family home is considered the best asset for you however, you still have to have the income to support the mortgage repayments otherwise the bank will not loan you the money.
Interest rates are so low at the moment that we can expect a strong property market in the next year or two as youngsters take the opportunity to get on the property ladder. The sharemarket is going strongly and I believe this to be due to the pitiful interest rates offered to savers as money which was invested in fixed term interest investments are now being reinvested in the sharemarket.
It is a time for investors to tread caution because there will be ads from finance companies offering higher interest rates to temp them. Those who got their fingers burned during the Global Financial Crisis will be well aware of the kinds of traps which ensnare investors with greed being the main one.
There are plenty of other options for investing your money with gold being one of them. If you are interested in getting involved then the link below will provide plenty of information;