Regardless of your orientation about debts, when viewed properly, they are are tool that can benefit your position and finances. You need the right assessment of your credit so that you can continue to enjoy the positive contributions of debt.
1. Do you treat credit as temporary relief or your lifestyle? Being in debt all year round is good only if you are backed with a vast resource. But for most of us who can’t afford to use credit for a new car, a home mortgage or a college education, it is always best to save in advance and pay in cash. When you are tempted to use credit for an amount you can’t afford without help, ask yourself if the debt is just temporary or not.
Once you decide on using your credit line, be strict in following your loan’s timeline. The timeline is your tool to repay the debt on time and in full. This way, you can be sure to have temporary debts instead of having seemingly endless debts to pay.
2. Is being in debt worth it after all? In the first place, is the debt necessary? This question serves as your strainer. For example, a vehicle financing loan may be necessary but having two vehicle loans at the same time is not a good idea. Even if we assume that you need two vehicles, having two loans double your obligation. The best resort is to pay off one vehicle at a time.
However, it is sad to note that people become addicted to a new car every three years, regardless of whether a new one is necessary or not. These people do not realize that they move from one car loan to another year after year which develops into an unhealthy pattern.
It is important to emphasize that debt is not at all bad. When debt is used to invest in your family’s future such as a small business or a family home, that credit is a good credit to have. So the final question is: Is your debt pattern good?
Have a personal diagnosis of your debt pattern. Do you use your credit in a lifestyle within the limits of what your income can afford? Do your debts show that you are responsible because your credit decisions are always based on future financial success? Do you feel confident about your financial stability in the future because you know that your decisions today will pay off soon?
If you are embarrassed to answer yes to these questions, then you know well that your credit decisions have been bad and that you need a decision action to overhaul your credit decisions for you and your family’s sake.