One way to figure out if
you’re taking on good debt or bad debt is to ask yourself, “What is its
intended end-goal? If the end result of your debt adds real value or income to
your life, it may be good debt, such as borrowing money to help finance your house
of your business. However, if your debt is made simply to finance your
lifestyle, it may be a bad debt. For example, going on a shopping spree every
month using your credit card and not paying that off immediately – that’s a
prime example of bad debt.
Let’s assume that you have
bad debt right now. Bakit kailangan mo itong bayaran bago ka mag-invest?
Simple: Kadalasan mas malaki ang interest rate na binabayaran mo sa utang kaysa
sa kikitain mo sa pag-iinvest.
Sabihin natin na maganda
ang stock investments mo this year, at nagga-gain ka ng 15% pero nagbabayad ka
naman ng utang sa credit card na 3% kada buwan. That gives you 36% worth of
interest to pay off every year! Even with a steady return of investment, having
debt can and will eat away at your money and net worth.
Don’t take one step
forward and two steps back. Before you start investing, pay off any bad debts
first.
God Bless Us..
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