Pay Off All My Credit Card Debt? Whatever For?

Many people want to get rid of debt, and that is a laudable objective. Most debt may well be bad, although some forms of financial debt are a whole lot worse than others.

It is necessary to know the several types of debt and which is which. A lot of people dream of getting out of debt. Maybe you are one of them. The great feeling and independence of being free of debt, of not owing anything to anybody, is an extremely attractive prospect. It is a worthy goal that deserves really serious thought and action.

All debt is not the same. There are some types which can be terrible to have; a few may not be so bad. So which is which? It is usually helpful to sort money owed into one of 3 categories: consumption debt, use debt and investment debt.

Consumption debt is the worst type of debt to have. Consumption debt, like borrowing money to pay for a vacation, is to be avoided. The most common form of consumption debt is credit card debt, so easy ti get into and so expensive to carry.  If you have credit card debt you should plan to be paying off that credit card debt first, as fast as you can.

Use Debt is financial debt you will get with buying some thing to make use of, like a car, a truck, a boat or an airplane, for instance. Use debt is typically secured by something of value but that's depreciating every year. It's not good, but may well be necessary to give you a thing that you need to work or to transport oneself to your workplace. It is bad, although not all that bad.

Investment Debt is debt you acquire when it comes to buying or getting assets that will create income or financial savings in the future. Examples would be college loans to help you get a university degree or even advanced degree, your house mortgage loan which permits you to purchase a house, build equity rather than pay rent.

Investment debt gives you control of money-making or mopney-saving assets that you can use. Investment debt, when it is contracted to acquire actual money-making resources, could be almost a good thing.

It can be better than doing without. It can be better to be able to produce the income or save the cash that the assets obtained with investment debt can provide.

When you are paying off debt, you will want to pay off credit card debt first. Pay of use debt second. Investment debts can be the last to be paid.