Why Is Debt Bad?
Posted on
July 12, 2009
at
7:24 pm
i've been thinking about it over my weekend, and i've come to the conclusion that debt is bad. i'd love to hear your inputs on this, though, before i share mine.can anyone tell me specifically why debt is bad?
Posted on
July 13, 2009
at
12:25 am
Personally I don't think ALL debt is bad, but debt CAN BE bad. Debt, if left unpaid, will have negative effects on your credit report, and hinder your purchasing power in the future. Also if the debt stemmed from a source that did not cause a lot of benefits to you, it has the potential to be a source of annoyance.
Posted on
July 13, 2009
at
1:34 am
What do you consider to be "good debt," anyway? 'Cause I'm sure that if there's bad debt, then there must be good debt as well.
Posted on
July 13, 2009
at
2:25 am
Generally speaking, Good Debt consists of investment debts that increase in or create value. The most common example of this is mortgage. I may be wrong, but once you purchase a house, this particular item appreciates in value. Other examples of good debts are student loans, real estate loans, and business loans. The money that is used towards the loan that is made equates to an investment that has a beneficial long-term effect on the borrower. In the case of the student loan, the individual gains learning and may be able to apply what s/he studied for in their professional field of expertise. This kind of debt in turn may produce more wealth for the borrower in the long run.
Posted on
July 13, 2009
at
3:16 am
Just to pick up where Cow left off~ Bad debt consists of debts that depreciate in value, or when purchases of disposable items are made, and the consumer does not pay off the balance in full. Disposable items in question include food, shopping, and other consumables. It seems quite evident that credit card debt is an example of what a bad debt is. It has the potential to create what experts call "an unhealthy financial situation." Whenever a debt is not paid in full after a certain billing period, the account accrues in interest. In turn, the value of the purchased item decreases, given that it's merely a disposable or durable item, and conversely, the amount that needs to be paid for continues to increase.
Posted on
July 13, 2009
at
3:21 am
Debt can also be considered "bad" when it's charged-off, right? Or is that an entirely different discussion altogether?
Posted on
July 13, 2009
at
5:32 am
not really Cheetos Lover, it is relevant to collections and the credit report. For the consumer a charge off account means that he/she would get collection calls and even a lawsuit--if he/she fails to act appropriately to the demands of the collection agency.
Posted on
July 13, 2009
at
5:55 am
Bad debt is the purchase of disposable items or durable goods using a credit cards (which incurrs high interest) and then not paying the balance in full. It's a waste of money. Each time you pay partially on your credit account, you're slapped interest. While the item that your purchased, that disposable or durable item continues to lose value.
Posted on
July 13, 2009
at
11:13 am
Why is debt bad? To address the charge off issue- a charge off typically occurs at 180 days past due, and essentially the lender is writing the debt off to get a tax break. And yes, at this point, lenders tend to turn the account to a third party for collection.
Posted on
July 13, 2009
at
8:34 pm
Wow lots of responses here. Thanks for participating. Here's my take on the matter: debt is bad because it has a negative effect on your credit report, especially when you dont pay for your bills on time. Your credit score goes down, collectors hound you for payment, and you just may end up being sued if push comes to shove.In fact i am enlightened abt the Good Debt discussion because i really didnt know that debt can actually be good. that it actually CAN be beneficial.Just comes to show that we really shouldn't bite off more than we can chew, huh
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