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Turning Bad Debt into Good Debt

Turning Bad Debt into Good Debt

Most of the time when we know that a person has an existing debt, we easily judge due to the stigma attached to it. All we know is the stereotyping description coordinated with debt such as dilemma, nightmare, misfortune, and instability.

In fact, whenever the topic is about debt, people are looking at it as a red flag and a subject that feels disgusting to open up about as it is looked down by society. But when we look at its definition, it is not really bad. It’s when you don’t take responsibility that it can turn for the worse.

The brighter side

So now let’s end the stereotyping and look at the brighter side of debt. There are instances when it can be a big help to build wealth – all you need to understand is the ways and how you can use it wisely. Here are some debts that can actually be good:

  • Student loan. You can use it to earn power throughout life. It increases the value of an individual, which will help them to get a high-paying job.
  • Home loan. It can give someone a place to live. Also, a home’s value increases over time that’s why it really helps to build wealth which gives you an asset.
  • Business loan. If you invest in a business and it booms, it will give you a passive income. So when you decide to build a business, you have to focus on it.

You can actually consider it good when it doesn’t financially ruin you and you know the reason why you are getting one. When it financially ruins you, it is not the debt’s fault but yours. To make it easier to understand, here are the different faces of good debt:

  • It can generate a good income.
  • When it allows you to have a better lifestyle.
  • It can upgrade your ability to earn.
  • It allows you to build financial discipline and goals that can last longer.
  • If it can be paid on time, regularly, and in the right amount.
  • When it provides security and flexibility.

One example of a debt that can give security and flexibility is when it is used to have a brick-and-mortar store. It is a traditional business or retail outlet having a physical store which you can find in malls. Although businesses now are recommended to venture into the world of e-commerce, it is still better to have both.

Yes, it is perceived as more impactful to have an online store since technology is rising and people are more techie. But many consumers still prefer to check at a physical store to look for their purchases personally. It allows them to have a great deal and look over the items physically, especially when buying video games, gadgets, and perfume. Brick-and-mortar stores are still a considerable option since it gives higher sales than virtual stores.

Whatever business it is, a traditional or online store, if it gives you the income that builds you the ability to build wealth, it is good. Whether the investment comes from debt, if the money works for you, then you used the real meaning of a good debt. Many business owners now are just happily sitting in the corner and their income is passive due to wise decisions which helps them to grow their wealth. And that’s how a good image of debt works, and now they are debt-free.

Debt management

It is really advisable to have the wisest decision when it comes to debt management. Today it is really easy to apply for a loan since there are lending companies that have a quick and easy process for applying for an advance. Bear in mind that having bad debt is easy, you can have a cycle of purchasing through a credit card, online or in-store. But it will never give you a good life when you cannot pay on schedule. When it comes to worse, continuing that cycle can bury you in debt.

So instead of having a bad debt, make an effort to turn it around. With all these strategies, debt is not a dirty thing if you know to handle it. It can also help build a strong financial foundation for you. By being responsible and using the fund the right way, a good debt can totally change your future in terms of achieving your financial goals.

Ask for advice from a financial advisor to make a good debt. Or, you can use some mobile applications to make good debt possible and help you manage your money responsibly, technology now is rising and it will help you keep making wise decisions. Stop the negative thinking about debts because, in reality, it will help you rise toward financial stability.

If you liked our “Turning Bad Debt into Good Debt” and find it useful, check our blogs regularly for more information on how to get out of debt and get updates on personal wealth apps in Australia.