Does Good Debt Exist?

Debt is a very common thing nowadays. To put debt simply, it is borrowing other people’s money to make more money. When emergency situations come up like illnesses, child support, disasters and other urgent situations, debt may seem unavoidable. Debt might be a rational investment when it comes to your financial future if you have a stable, clear and specific preparation for taking out a loan or debt, and a realistic plan in terms of paying it.

How can a negative thing turn out to be positive choice? Some examples are investing in your own business or expansion. A loan might help you to head start your business. While in beginning stages of development of your own company or business, it requires a number of people, renting out a space and other operational expenses. Making money is the whole point of starting investing at your own production. If you carefully plan and manage your business and it does well, you have the chance to pay out your debt or loan and gain more profits.

Buying properties and mortgage is a well thought-out and good investment because these possessions usually increase value over time. If managed appropriately, what you gain and earn from renting out residential or commercial building may be sufficient to cover your monthly due payments. Residential real estate can also generate a good number of incomes, by receiving payments from renters or borders which can add to paying off your debts. In the long run, after paying back a home loan over time, you’ve max out its profit.

Investing in education and student loan to pay for university will help you finish your studies. Getting a college degree means you can get you a chance to land a good job and career ahead of you. Graduates with the right amount of skills and knowledge might be considered for higher pay. Bearing in mind that the interest rate is relatively low for student loans, paying might be a little easier pay once you’re earning in the future.

As said, good debt can boost your net worth and assist you to generate a good amount of value that can result to a positive outlook. What can be considered a bad debt? It’s a debt that does not raise wealth and with no long-term value. One example is charging expenses to credit cards that can balloon payment if not well tracked. Purchasing luxury goods that can’t affords such expensive cars that you don’t need; designer clothes and bags, deluxe holiday trips, gadgets and other possessions that are not essentially needed.

The value depreciates in time and the high interest rates of borrowing for that goods would just add interest to your debt. Also, borrowing money to pay bills, rent, tuition fee and other financial obligations are not a good sign part of a good debt. Noting that you have to settle all of your bills this month, the probability of borrowing the next month is high and your debt will only build up. Planning on how to settle and resolve your debt can help your good debt to continue to be good. If struggling for debts, might help you.

How to calculate your total debts

How to calculate your total debts

A person dejected from his life due to burden of debt always feels that he can never get out of this mess. But that’s not true; many people face such situations where they are unable to meet their financial obligations.  If you live in England, Northern Ireland, and Wales, you can go for debt solutions that provide an acceptable time of around 5 to 6 years to arrange funds and repay them slowly. When you accept the IVA solution, creditors cannot forcefully recover outstanding payments from you.  An Individual Voluntary Agreement (IVA) is an effective way to start fresh, pay off your debts and get protection from creditors.

Firstly, you need to know about your eligibility to qualify for an IVA. Secondly, you should also be aware about what is the process to repay the debt amount. Thirdly, you need to take a decision that whether you want to go for it or not after reading the terms and conditions. Last but not the least, if not IVA’s, what are the other alternatives.

Let’s discuss your financial situation-

You may think of IVA if you are struggling with unsecured loans such as personal loan or credit card bills. You are facing the problems of insufficient funds in your bank account or cash in hand to pay off your current payments. This would have resulted in accumulating interest payments penalties, warning letters that are increasing the burden of debt. Hence, it is advisable to apply for debt solutions that suit your requirement. If you live in Scotland, you can apply for protected trust deeds or debt arrangement schemes and seek for debt advice Scotland.

How to calculate your debts?

An Insolvency practitioner would assess your financial situation. He would calculate your debts with the help of an IVA calculator and contact your creditors to propose the IVA for approval. A meeting is arranged to seek the approval of the creditors, if around 75 % creditors agree to IVA, the contract of IVA would be legally binding on you and the creditors. When the agreement becomes legally binding, the charges and interest are frozen and you get complete protection from the creditors. Your credit report includes the IVA and when your agreement is completed, it reflects in your credit rating for six years.