Most people get into debt at some time of their lives. In fact, debt is often sought after by many people who want to buy their own homes. House prices are so expensive that most ordinary people have to borrow money by way of taking out a mortgage, and these mortgages get paid back over many years – usually up to 25 years.
People also often buy other expensive things like motorcars for example by taking out a short loan over a number of years, anywhere from 1 to 6 years in fact.
There is nothing wrong with being in debt. As we’ve shown it is quite normal. But the key thing to remember before you take on any sort of debt is to make that you can afford the repayments.
There are two types of debt; good debt and bad debt, so let’s take a look at these, starting with good debt. If you need assistance with debt management, or are interested in learning more about saving, budgeting and investing then check out the free ‘Money Academy’ resource here for instructional videos.
What is good debt?
Good debt can be seen as a way of investing in your financial future. It’s something that will enhance your future personal wealth. Taking out a student loan is a prime example of good debt. This is aimed at bettering your future employment, and money earning potential. Another good example is taking out a mortgage on a property. Properties generally increase in value … Read More