When thinking about debt it is too simplistic and black and white to consider it as a bad thing. Life is anything but black and white in how it works, everything in reality is a shade of grey, and debt is much the same. Whether you are considering taking out a short-term payday loan to alleviate immediate financial problems, a credit card to pay for a big-ticket purchase, or a mortgage to buy your first home, there are many different factors to take in to consideration. A debt can be good or bad it is more about taking into account your own personal circumstances, finances and future prospects. A balanced approach to debt and borrowing and a healthy outlook in paying back your debt is the best way to be.
The main question you should ask yourself is whether you are helping your future or creating a potential problem by taking out a debt? Every situation will be a unique one with a different answer to the last, and that answer might change for you depending on the time of your life and the current employment and financial circumstances you are facing.
There is no hiding away from the fact that there is a problem with debt in the UK. Over the last few decades more and more people have taken on board credit card debt, large loans with high interest rates, and become embroiled in spiralling debt that is difficult to overcome. It is easy for a debt to snowball or for multiple debts to come together to make your whole world come crashing down. It doesn’t have to be this way however.
In the last few years there has been a substantial change for instance in an area of finance that only had a bad reputation just a few short years ago. Payday loan providers now include a modern breed of responsible lenders who are open and transparent about the service, and will never provide finance to a person that cannot demonstrate that they have the means to pay back a debt within the agreed terms. What this has done is open up the market to those who might have bad credit, but it has been achieved in a way that is responsible and doesn’t pile on extra pressure and never-ending sums of mindboggling interest payments.
Another area that can be used wisely is with 0% credit cards and balance transfers. With the right approach and a savvy look at different offers available, people can transfer current debt from one credit card to another with 0% interest for a period of time (usually anywhere between 6-24 months). What this does is significantly lower interest payments on all debts and allows people time to pay down multiple debts in one simple payment structure, without having the added pressure of large interest fees being attached each month.
Living a debt free life is achievable, but that’s not to say that all debt is purely bad. By demonstrating that you can pay back debt on time and consistently you are becoming a much more attractive proposition should you require a larger finance product in the future, such as applying for a mortgage.