Bankruptcy & Foreclosures

Is living a debt free life a realistic goal? Many people believe that this is simply impossible. Although you may be able to cut all debt out of your life, it will be very difficult. After all, most people want or need to make purchases that will require a loan. These purchases can include anything from a home to a car.

That being said, you should keep in mind that there is good debt and there is bad debt. If you have good debt you may not find yourself in financial distress. But if your bad debt is growing, this is when you will begin to experience problems that could cause major issues soon enough.

Generally speaking, a mortgage is good debt. The reason for this is simple: most homes appreciate in value. So even though you are going into debt to purchase a home, over the long haul you will earn money.

Although a car is a depreciating asset, it is often times debt that you need to incur. After all, if you are going to live a comfortable and convenient life you will probably need a car. While some people can afford to pay in cash, this is not the case for the majority of buyers. Although car loan debt may not be considered good, through and through, it is not as harmful as other kinds.

What is bad debt? The most common answer to this question is credit card debt. This is debt that you do not need to have, and of course, debt that is often times attached to a very large interest rate. Credit card debt is the downfall of many budgets. This has been the case for many years, and probably always will be. Anytime that you hear the phrase bad debt you should think of credit cards.

It may not be realistic to live free of all debt, but you should at least try to keep bad debt out of your life.