Personal Development, Finance, and Investing For Filipinos
An investment in knowledge always pays the best interest. Financial Education is your best investment.
Out of debt, out of danger. Day off your debt, you deserve to have your own money.
There are two types of debt, good and bad. It is important to understand the difference between Good debt and Bad debt.
Let me first start by saying that ideally, the best situation is to have no debt at all. In an ideal world, the perfect amount of debt is no debt.
I say this because even if there is such a thing as "good debt" the fact remains that you still owe someone money and the Bible is always right and makes sense when it says in Proverbs 22:7 that "the borrower is the servant to the lender."
However, in this day and age, it would seem that we couldn't escape the fact of debt. This is unrealistic for most people who aspire to own a home, automobile, or start a small business.
Knowing The Difference Between Good And Bad Debt
The difference between these two types of debt can be distinguished as follows:
Good debt is generally defined as that which generates income and increases your net worth. Good debt typically has a lower interest rate, something you believe will grow in value over time, helps increase your credit history, and is within your budget.
Bad debt is of course the opposite of good debt. This is debt that does not generate any income and does not increase your net worth. Bad debt is typically higher interest debt, not backed by a value increasing asset, unplanned within your budget, and can negatively impact your credit score.
Know What You Are Getting Into
Earl Wilson once said, "Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's." Those caught in the sinkhole of debt belong to the last category. Make sure you are not one of them!
If you incur good debt, make sure it doesn't become bad debt. If you have a habit of making bad debt, it's time to end such a bad habit. And if you are in an ugly situation now, fear not! It will come to pass.
Don't lose hope.
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.