Global Economic Crisis » Debt

Good Debt vs. Bad Debt – Which Side are You On?

Stephen Cline — Tue, 02 Aug 2011 21:37:10 +0000

The idea of good debt and bad debt may be oversimplified. There are many arguments for what might be called “bad” debts. Sometimes, these have good qualities about them. Also, not everything in life is about living by the numbers, and sometimes an exception can be made. However, this article will help you clarify where your debts are quality-wise.

Good Debt

A good debt in its purest form is a debt that makes you money without requiring you to work. One example of a good debt is buying a rental house that you can rent out. When debt is used for good reasons, it can be called leverage because your money can do more than it usually could. Other examples of good debt are to buy equipment for your employees to use in your business.

Bad Debt

Bad debt is a debt that will never make you money. One shining example of bad debt is a big screen TV. While you might be able to use the TV for business and deduct it from your taxes, this is a flimsy excuse to go into this type of debt. Another all too common example of bad debt is going into debt for a vacation. If you can’t pay for a vacation out of your own pocket, don’t go in the first place.

Gray Areas

A lot of financial decisions are far from black and white. For instance, you can go into debt for education that you may be able to use to make money later on. You may also take on a loan to buy a car, which you plan to use to travel to work and earn your living. While these are potentially good debts, there is no guarantee that you’ll be able to find work using that car or with your training. So at best these are gray area debts. However, you can find some financial tips from plaingreenloans on when debt is potentially useful.

Almost everyone takes on some debt in life. Debt itself is nothing to shun on principle, because it can be extremely useful to you. However, debt is like fire in that it can harm you if you don’t control it properly. When your debts are good, they generally make you money with little continual effort on your part. When your debts are bad, you have to work harder just to support them. Get as much good debt as you can, and give bad debt the cold shoulder.

Companies Getting it Right

Stephen Cline — Mon, 02 May 2011 10:09:57 +0000

While there has been much dark to the recession in regards to the United States economy, there has been some positives too. One of these is with the operations of business. While the constant tightening of the belt is seen as a negative, it’s anything but. These days the companies that were having problems before are learning from their mistakes. While it might seem ugly now, it’s going to benefit the people in the long run.

Many times when a company falls on hard times they cut costs and wait for it to be over. Once the recession is over they begin to go on a spending spree as the money starts rolling in. However, these companies are not starting to spend more even though the economy is slowly turning itself around. It’s one of the nicer things to see. Sure, there are employees who are upset that they are not seeing an increase in jobs, but it’s just an inflated job market that would only correct itself once all was said and done.

Another thing to consider is that there are a number of companies who have cut traveling expenses for employees. These sorts of discretionary spending was the kind of things that led to layoffs in the first place. It was cutting employees before travel and luxuries. Now they are keeping the luxuries to a minimum and they are able to keep the jobs that employees so richly deserve.

It seems as if businesses are being greedy, but the truth is that they are just doing what they have to so they aren’t in this mess again. It will take getting used to, but everyone is better off for it.

A History Of Debt

Stephen Cline — Thu, 14 Apr 2011 12:00:09 +0000

Would you take my wampum in exchange for your house? In the 1620′s, the Dutch would have accepted the sacred beads like currency. Debt began way before the Native Americans found their own currency, though. Find out what Hammurabi thought of debt, and when human cages were in vogue for debtors’ jail. These facts will make you think twice before filing bankruptcy.

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Blackholes in your Credit Cards

Stephen Cline — Mon, 21 Mar 2011 19:10:40 +0000

Image by Getty Images via @daylife

While we can’t avoid blackholes from wreaking havoc in the Universe, we can avoid devastating financial blackholes due to hidden fees, over-the-limit fees, and late payment fees that accumulate with credit card spending. Sometimes it seems that all of our hard-earned money goes toward paying down these fees and causes our money to disappear right before our eyes.

However, there is a way to avoid these blackholes, get back control of your money, and be on the road to financial freedom. Consider using a prepaid cash cards can help manage your money and avoid financial pitfalls due to credit card fees.
Whether an individual, or a business, here’s how to avoid blackholes in your credit cards:

Consider Cash vs. Credit

When making larger, more expensive purchases, it’s tempting to use a credit card – especially one that offers reward points. However, whether you’re starting a business, refurnishing your living room, or sending the kids to college, placing large amounts of money on credit cards can be devastating to your personal finances, especially when unnecessary fees accumulate.

Some financial experts agree that if you’re unable to pay down a credit card charge within six months, then a better option is to use cash. A word of caution – frequently using cash can sometimes lead to overspending as we may perceive cash as “extra” money in our budgets. So, how do we spend responsibility AND avoid being sucked into a financial blackhole? One option is to budget for expensive purchases by putting the cash you’ll need on a prepaid card like the REACH Card.

Prepaid cash cards offer the benefits of available cash, with the security of a credit card. Cash cards allow you to save what you can, keep track of your spending, and avoid accumulating unnecessary fees. When taking control of your money, the REACH card keeps you out of those blackholes, and keeps your money where you need it most – in your wallet!

Choose Wisely

When deciding to use a cash card or a credit card for your next purchase, weigh the benefits of each and be sure to spend only what you can afford. Credit cards can offer the benefits of instant gratification and earned rewards. On the other hand, prepaid cards are just as convenient to use, and they don’t come with the blackholes found in credit cards. However, if you decide to use credit cards, it is wise to do so only in moderation and to make sure you’re familiar with the card’s terms and rates (especially when controlling a corporate card). Be aware that the card’s terms may change often!

Bottom Line

Whether you’re trying to save for an expensive purchase or just for a rainy day, you really need to plan on how you’re going to do this. It’s not smart to put all your money on a credit card when you can’t afford to pay it off.

14 Countries on the Verge of Bankruptcy

Stephen Cline — Tue, 25 Jan 2011 17:02:03 +0000

Granted, the current economic situation in the U.S. is far from great due to an ever-increasing national debt; but when looking at the financial dilemma on a global scale it quickly becomes obvious that other countries are even worse off than America.

Here are 14 countries on the verge of bankruptcy, including the U.S.

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Debt Settlement Help Available

Stephen Cline — Sat, 08 Jan 2011 23:44:58 +0000

http://www.sxc.hu/pic/m/j/jo/johngard/621161_the_money_trap.jpg

The current economy has thrown many into a financial hole that requires them to find a ladder to crawl out. Finding a ladder that is long enough to get out of the hole is a task that can be overwhelming. One avenue that many are taking is enlisting the help of a debt settlement agency. These agencies work with individuals in debt, also called debtors, to try and get a handle on their debts. This consists of several things including debt consolidation, debt settlement and debt negotiation.

The debt settlement agency works with the creditors on behalf of the debtors to reduce the amounts owed, arrange realistic payment plans and combine multiple debts. Although the process does not happen overnight it can be a relief to have the help of a professional who deals with creditors on regular basis. They can take the burden of negotiations from the debtor and work with the creditors to come to agreements that will fit into the financial plans of the debtor. Allowing a debt settlement agency to be the mediator between debtors and their creditors can be a great advantage for those who are facing financial hardship.

This process is intended to help the debtor create a step by step program to get them free from the money owed in a fair amount of time and giving them a fresh slate to start from without filing bankruptcy. When searching for a debt settlement agency to help with debt management, debtors should use caution and obtain as much information about the service as possible. Personal and financial information should never be released to any person or agency without first clarifying their credentials. Contacting the better business bureau and the local licensing agencies is a great way to learn more about the service.

Debt Presidents: Increasing The Federal Debt

Stephen Cline — Fri, 08 Oct 2010 15:43:17 +0000

We all remember our elementary class president’s promise to put Coke in the drinking fountains, and likewise, we remember each United States President’s promise to lower the federal debt. Once a person takes office, though, these promises seem as likely as Donald Trump getting an attractive haircut. With thousands of Americans filing Chapter 7 bankruptcy every year, debt is on everyone’s mind. From 1977 until now, can you guess which president succeeded in lowering the federal debt, and who raised it the most? Also, find out what the projected debt for 2010 will look like as a percentage of the GDP.

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 Source: Debt Presidents: Increasing The Federal Debt

Budget cuts in Europe=Bad for America

Stephen Cline — Tue, 28 Sep 2010 05:00:10 +0000

The U.S. economy got another blow from the European crisis this time in the form of budget cuts. The British PM’s announcement of the extreme cut back in the form of government spending along with the German austerity plan detains, caused the U.S. economy to feel the shock waves.
This move is going to reduce the creation of new jobs in America and will have a negative effect on the already snailing U.S. economy. This will have a similar effect on the economy of the rest of the world. The British Prime Minister David Cameron expressed his concerns over the consequences of the debt crisis in Greece, Spain and other similar European economies. Already the European debt crisis has had a profound effect on U.S. and global stocks and plunging stocks are a common new since. This will lead to American and global customers to cut back on their spending in anticipation of another recession.
The German austerity plans will have an sudden impact on the imports and exports of the American economy since Germany being an export powerhouse. And after Germany, Francs is rumored to follow suit with its own austerity plans that will further effect American and global economies.

How To Avoid Debt Traps

Stephen Cline — Tue, 21 Sep 2010 17:41:06 +0000

Avoiding debt can be one of the hardest things a person will face in their adult life. Sometimes it’s just a part of life. Fortunately there are things you can do to avoid the common mistakes most Americans make. There are a few ways to avoid the common debt traps you face, here is quick guide on how to prepare yourself for that situation.

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Debt Reduction Solutions

Stephen Cline — Wed, 04 Aug 2010 16:32:18 +0000

: Image by quaziefoto via Flickr

There are many options available to those who need to reduce and get rid of their debt.

One popular method is with debt consolidation. This proves to be a lifesaver for those that have incurred a heaping amount of debt over the years and find themselves unable to make the minimum payments. Debt consolidation companies are effective at making deals with the creditors. They actively try to reduce the amount of debt that is owed and the interest rate. They will then determine a monthly payment that is affordable to the person in debt and allocate payments to the creditors.

An alternative to reducing and getting rid of debt in less time is by taking out a loan and using the funds to pay off the debts. The person in debt then has one monthly payment on the loan instead of several payments. The goal is to obtain a loan with a lower interest rate than that of the combined debts.

Once a person in debt takes the steps to get himself out of debt, he must learn to stop the cycle of accruing debt. This can be done by getting rid of credit cards, changing spending habits and focusing on the payoff of those debts. It’s a wonderful feeling when the last payment is made and you find yourself debt free.

Often times, it is the responsible act and determination to get rid of debt that leads to a motivation to generate more money. With the state of the economy, it is a wise decision to organize finances and create a budget. There are many websites out there that keep consumers in the know on current events with the economy. Sites like EconominCrisisBlog.com inform readers of current states of the economy and provide help with financial decisions.