The Frugal Pig » debt

What Debt Is Good Debt?

Oink — Wed, 16 Jun 2010 16:04:20 +0000

Is Any Debt A Good Debt?

Is Debt OK?

We talk a lot about paying off debt. We really hate high credit card balances because they tend to be for things that are not really tangible or long lasting, and those rates can really run out of control. There has been a lot of talk about the mortgage crisis, but I am sure that credit cards have gotten a lot more people in financial trouble with little to show for their expenses.

Emergency Credit

Of course, it is better to be able to pay for an emergency bill with your savings. But we, of all people, understand that sometimes troubles just seem to pile up. It is not always possible to choose between filling a cavity and getting your car repaired. Your dental problems could just become worse if you neglect the cavity, but you may need your car to get to work. So sometimes, the cost of debt will be less than the cost of waiting for a service. In that case, you should probably just go ahead and charge it.

Long Term Goals

Most experts advise us that it is ok to borrow for a long term goal.

An affordable home mortgage is one example of a loan that is usually acceptable. We all need a place to live, and you should, at least, have a house to show for your loan! Besides, we also all have to live somewhere. You will probably have to pay rent or pay a mortgage.

Borrowing for an education, that can help you get a better job and more productive life may be another example. These days, we hear a lot of stories about graduates who got in deep trouble because of loans, so you should really consider all of your options to keep debt as low as possible. It is becoming a lot more attractive to spend, at least, a few years in a local community college if university tuition is out of sight.

Basic transportion may also qualify as an acceptable loan. If you have a Kia budget, don’t go for the new Lexus though. Auto really devalue, and people save a lot of money by purchasing the least amount of acceptable transportation.

What does not qualify as an emergency?

A vacation does not qualify, and neither does a restaurant meal. These thing can really add up, and you can find yourself making payments for years on vacations or nights out you barely remember. If your budget is tight, it may be time to rediscover the pleasure of a picnic or day trips. Hotels are nice, but if Aunt Marge doesn’t mind, pack into her place for your visit. If you are short on funds for the grocery store, why not try cleaning out the pantry and using up all those cans of chile you bought a few weeks ago? Maybe next time, that emergency savings account will be funded.

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Should I Pay Off Debt

Oink — Thu, 03 Sep 2009 17:15:02 +0000

Will Paying off Debt Help Finances?

I think that most of us ask ourselves this question from time to time. Will paying down loans help us in the long run? Of course, almost everybody I know would be very happy to be debt free, and owe nothing to anybody! But for most of us, paying off credit cards, car loans, and mortgages will certainly deplete the cash reserves we need for emergencies.

There is probably not one right answer for everybody. But rather than flipping coins or consulting the I-Ching, you can actually do some hard analysis on these questions. It is not that hard to figure out how you will benefit from paying down loans, and if it will be worth the risk.

This website has online money calculators which you can use to give you some numbers. In addition we have published an online debt payoff calculator. You can use these simple tools to give you some real answers.

And if you do not have the cash to reduce your balances to zero right now, you may profit from a high balance credit card transfer. Find offers for lower interest rates, and then if you cannot get your current credit card company to give you a break, move that debt now.

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Americans Are Cutting Debt – But Why?

Oink — Thu, 11 Dec 2008 20:19:29 +0000

While I was hanging around on Yahoo Finance watching my stock portfolio bottom out, I did notice an article that looked encouraging at first glance. It said that US consumer debt has dropped a bit for the first time on record. i.e. for the first time, since they started tracking consumer debt, it has dropped. Now this should be good news that Americans are finally realizing that the future pain that debt gives them is not worth the quick satisfaction of a 50 inch TV set or something.

Is Declining US Debt Always Good News?

However, are Americans cutting debt by choice. It is hard to believe right now, especially in the holiday season. Actually, credit card companies are putting the squeeze on consumers, and falling debt levels may not be the consumer’s choice, but the fact that their credit limits have been sharply dropped.

And even though consumer debt has gone down by less than 1 percentage point, Americans net worth has declined by over 4 percent. Mortgage debt has also decreased, but it may be because many Americans have given up on their mortgages, and others cannot get a loan in this tight credit market.

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Got an extra dollar to spare … For your Credit Cards?

Oink — Thu, 23 Oct 2008 13:09:50 +0000

So can you spare a buck a day?

If so, maybe you can apply an extra $30 a month to your credit card bill. If so, you will be paying to finance $360 a year less, which with interest rates approaching 27% on some cards can be substantial! This is especially true if you have only been paying the minimum balance and found that you are not getting anywhere trying to pay off your balances.

This same approach can also work on car loans and some mortgages. Look at the monthly payment as a minimum and try to kick in a bit extra when you can. I am here to tell you, but nothing is so satisfying as watching those balances decline so you can think about the day when you do not have monthly loan balances to make payments on!

In addition to saving money in the long run, you will also reduce the length of time it takes to pay the bill off. So go ahead and buy the cheap coffee instead of the grande latte, and get that debt paid off!

If you haven’t been here already, why not visit our online debt payoff calculator and see how fast you can lower that debt?

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Prepare for a Recession

Oink — Fri, 10 Oct 2008 15:17:21 +0000

Well, now there is no doubt about the fact that the US, and the world, is enduring an economic downturn. We have been watching financial leaders and politicians deny if long enough, but even they are admitting it now. However, as much as we are all struggling to watch our expenses and keep our savings, we do find that some people do ok during a recession, and some people even prosper! What is the difference between those that can barely survive the crisis, and those that make out ok? I think the difference is being, just like a Boy Scout, prepared!

Look for some practical tips here: Surviving a Recession. It is mostly downhome advice like saving money, reducing debt and preparing yourself for a job loss. But it also contains some unique tips on making some income during unemployment with freelance jobs that you may not have thought of.

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US Foreclosure Rates Are Still Climbing

Oink — Sat, 14 Jun 2008 04:28:36 +0000

American Are Still Losing Their Homes

This is a pretty painful subject for me because I do know people who had to leave their homes. They did manage to land on their feet, and seem to be thriving in a more modest dwelling then they used to own. They did go through a crisis, but probably ended off better then most. But people, wake up, this crisis is not over. For some more gloom and doom see: US FORECLOSURE RATES ARE RISING.

Now some people were victims of predatory lending, and were mislead into some pretty awful mortgage deals. Some others lost jobs unexpectedly, or perhaps savings were depleted by falling interest rates or stock prices. Frankly though, many more people were victims of their own consumerism.

I guess, when faced with the prospect of having no house at all, a more modest home seems pretty attractive. There is something purifying about living modestly, and about knowing that you are living a bit below your means. And if you are saddled with a mortgage you cannot manage any longer, why not free yourself from the stress?

If you have a way to get out of your loan, even if you have to sell the home for far less then you think it is worth, why not take the ticket out? In the long run, you will probably prosper more, and have a happier life. I know this advice seems a little bit heretical here in the land of consumerism, but it is what my friends did. They are doing alright now.

If you are still financially stable, but worry about losing your home in case of a death, disability, accident, or unemployment, consider an affordable mortgage protection insurance policy.

foreclosures, mortgage crisis

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