Not all debts are bad debts. While it is true that too much of any debt may be detrimental to your financial health, it doesn’t mean that all debt is ill-advised. There are “good debts” and “bad debts”, in my opinion. Knowing the difference between the two can be the difference between having a life of comfort and prosperity vs. having a life of constant lack and poverty. “Good debts” are good for your financial health and well- being while “bad debts” can be likened to a disease that spreads and causes problems in other areas of your life. Which type of debt have you been accumulating?
A home mortgage, for example, may be a good debt if it is an investment that allows you to build equity in an asset that historically has risen in value year after year. Buying a home also means investing in the American Dream for a lot of people and this is a goal that most of us dream about achieving. Student loans are another example. When the money is used to finance a college education, there is an expected return on the investment. Studies have shown that college graduates can potentially earn more money and lead more financially secure lives.
But there are debts that can limit your ability to acquire real wealth. Credit card debts are probably the worst of these. Massive credit card debt can choke your ability to deal with your financial obligations, taking over your life and your ability to grow and prosper.
According to a recent research, the average credit card debt of U.S. households with at least one credit card was $9,205 in 2003, up from only $2996 in 1990. That’s a 310% increase! What is worse is that our children are picking up bad credit card habits. FACT: According to a student loan agency, credit card debts of college students have risen to an average of 46% in recent years.
Every day, I meet people who are up to their eyeballs in credit card debt but have nothing to show for the money that they borrowed. They have no real property, no assets and no savings. They have nothing but a big pile of credit card statements. And yet they owe more in credit card debt than they could ever afford to pay in this lifetime. These people have accumulated so much credit card debt over the years, not stopping even once to carefully think of the long term effect of their credit card borrowing on their personal finances.
To add fuel to the fire, consider the outrageous interest that the credit card companies are charging you every month. On a $2750 credit card balance with an 18% APR interest rate, it would take you 15 years to pay off this debt making minimum monthly payments. But here’s the kicker: The money that you “waste” on paying these outrageous interests is also money that you can’t use to pay down your good debts, such as your home mortgage and money that you can’t put aside to save for retirement, your children’s college education or for the rainy days. Very few people ever realize the “real costs” of credit and its significant and detrimental effect on their ability to prosper.
If you are experiencing serious debt problems and don’t know where to turn for help, call our office so we can help you determine what options are best for your situation. In some cases, filing for bankruptcy or debt consolidation may be the answer. In some cases, it may not be. Stop living under financial stress. It’s time to do something about your situation. For more information and to schedule a free consultation, please call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos, West Covina, Valencia and Riverside.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.