Debt


You will often hear people talk about good debt and bad debt. This is what is generally considered good debt:


-Student loans (because you’re investing in your education and potentially increasing your future income by doing so)

-Mortgages on a home (home ownership is increases your assets and you can build equity on a home)

-Medical bills (health takes priority and is a necessary expense)

-Business debt (often a necessary investment into a business in order for it to grow)

Some people say that all debt is bad, but at least we know we’re creating the debt above to improve our lives. Student loans are the main debt we’ll go into after high school. Hopefully we can work out student loans not to be overwhelming after we graduate. I was surprised to read a survey by NBC News from April 2018 (website tip below) regarding young adults’ debt between the ages of 18-34. 



-78% of young adults (age 18-34) have some form of debt

-25% are over $30,000 in debt

-11% are over $100,000 in debt

-The majority of their debt is credit card debt, not student loans

-62% of young adults owe more in debt than they have in a personal savings account

-24% have no personal savings at all



I’m sure you’ve heard the term ‘death and taxes’ as those are two things that nobody can avoid. If you have any outstanding debt, you can be sure that creditors will follow soon after - ‘debt and creditors’. Some bills may give you a grace period to pay within in order not to incur a late fee. Don’t count on that though. Better to be on time. Some creditors don’t offer the grace period anyway. 

Once you’ve gone past the due date and/or the grace period, you will surely be contacted by the creditor. A late fee will be added to your bill. If you ignore the creditors requests for payment, your account will go into delinquent status which means that you will no longer have an account and you are officially behind in payments. Different scenarios can happen at this point.

If you have a good history with the creditor so far, you might be able to pay the bill and get out of a late fee if you talk to an understanding creditor representative. Another scenario may be that your creditor increases your interest rate because of your late payment even after you pay because you basically broke your word with them that you would pay on time.


When you don’t pay past 30 days, your creditor can list you as delinquent on your credit report which decreases your FICO score tremendously for years to come. Now you will also get calls from collection agencies that can be annoying and aggressive. Even though they have no right to share your debt information with anyone and they are not allowed to be verbally abusive with you, this does happen. 


If months go by and you still haven’t paid your debts, the creditor may give up on you by selling your debt to a collection agency. There are collection agencies that purchase bad debt from lenders at a lower rate at which point those collection agencies will contact you instead of the original creditor. 

Let’s do our best to never get into that. The better informed and prepared we are, the better our chances not to become a statistic like the one mentioned above. It’s a whole lot of dread, stress and unhappiness. Especially credit cards and car loans should be avoidable if you’ve learned to keep a good budget and always ask yourself about the purchase being a want or need. Let’s not buy the cool, fancy car we would really love if we can’t afford it. Let’s stay reasonable even if it is difficult. 


If you have debt on several credit cards, financial advisors always preach to pay off the highest interest rate credit cards first when you’re in debt. That will encourage you to pay off your debt little by little.

Website tips:

Murray, Christopher. “How To Make A Budget: Step-By-Step Guide To Managing Your Money.” Money Under 30, 

“Debt Load Soaring Among Young Adults; Teach Teens to Avoid Debt.” Middle Earth, 16 Apr. 2018, middleearthnj.wordpress.com/2018/04/16/debt-load-soaring-among-young-adults-teach-teens-to-avoid-debt/

“Debt Load Soaring Among Young Adults; Teach Teens to Avoid Debt.” Middle Earth, 16 Apr. 2018, middleearthnj.wordpress.com/2018/04/16/debt-load-soaring-among-young-adults-teach-teens-to-avoid-debt/



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