What you have know about debt

[Deleted member 62875]

Debt is more prevalent than ever in today’s society. The data shows that consumer debt has grown to more than $14.9 trillion in recent times, with the average consumer having about $92,727 in debt. And as it becomes more common, it becomes increasingly important to understand how to manage debt.
Every debt is either revolving or non-revolving. Revolving debt is one where you can continuously spend and pay off the debt. The most common revolving debt is a credit card, though a line of credit is also a type of revolving debt.
Non-revolving debt is one where you borrow a lump sum and then pay it off over a specific term. Non-revolving debts include mortgages, student loans, personal loans, and car loans.
A secured debt is one that is secured by collateral or an asset the lender can seize if you don’t make your payments. Mortgages and auto loans are secured debts since your lender can seize your home or car if you don’t pay them back.
Unsecured debts don’t have any collateral behind them. The lender can still take legal action to get their money, but there’s no asset they can seize from you. Student loans and credit cards are examples of unsecured debts.
Understanding your debt
It’s important to know about and fully understand each debt you have. For each debt, you should know your
Total balance
Interest rate
Minimum monthly payment
Estimated payoff date
Once you understand your debt, you can use a debt payoff method like the debt snowball or debt avalanche to pay it off.

 

[Abigael]

It is really important to fully understand your debt this way. That enables you to have a plan on how to pay back the debt. So knowing things like the repayment date, the amount of interest needed and the total amount you need to have leads you to making a repayment plan.

Such good understanding is really great because you become a good borrower who takes loans with a plan of paying it back. That way, you build a good credit history and increase your borrowing limit.

Knowing the repayment date will also enable you to make a plan on how to get money for the repayment. Therefore, you take your time earning money knowing that you have a date to keep. That becomes easier for you because you won't get caught up by the repayment date and end up paying a higher amount.