Debts can either be good or bad depending on how you use them. For example, a debt you take on to buy a house or a car, are good debts since these acquisitions enable you to put a roof over your head and to travel. Meanwhile, excessive debts on consumer goods such as new electronic gadgets could turn out to be bad debts, that is, unless you intend and have the means to pay them off soon.
The paragraphs below share with you some tips on how you could avoid bad debts altogether. So if you're ready then read on.
In addition, check the details of the interest-free period. Some lenders might backdate the interest and calculate it from the day when you made the purchase, which could lead you to pay even higher interest than you initially thought.
You should therefore decide on whether or not debt consolidation is a good move for you. If you have a debt that you could pay in a much shorter period, consider doing that despite the higher interest rates. You'll actually pay less in the process.
In sum, take on debts if only you could repay them soon enough, with the exception of 'good debts' that we mentioned earlier. And you could only pay your debts soon enough if you have the funds to pay for them. This leads us to the most basic tip when it comes to managing your debts: always try to live within your means.
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