Debt Management, 2nd Step to Financial Security

First of all thank you for your continued effort in reading our blog in order to be financially literate: The 2nd in the list among the 6 Financial security Steps is Debt Management.

It is clear that you cannot invest if your are buried in debt.. But did you know that paying your debt is the start of your investment. Because the moment you pay your Debt, interest stop so as if, you have already save those interest that you are going to give to loan institution.

You should know that there are two types of DEBT, first is Good Debt and the next is the Bad Debt.

So What is Good Debt? Good Debt is a Debt that could lead to increase in cash flow, as an example you made a loan in bank to buy a car that could be used for your business or taxi. You made a 5% interest in the bank, but you are sure that your gain will be more than 5% from your business. It will automatically increase your cash flow. So that is Good Debt.

So What about Bad Debt?

Bad Debt is something you buy in debt, but only because you want those things. When I say “want” it only means something that you can live without. As a sample a DSLR camera, I categorize it as want because you can live without camera. Not unless you are a photographer and you need for your business so it could become a “need”.

As a piece of advise if you are in debt through Credit Card, and you decide to be financially free, make payment in your credit card debt monthly but always more than the minimum. And stop using your credit card. Remove it from your wallet and put it in your cabinet.

Credit Card is a temptation whenever it is positioned in your wallet.

Credit card is good if you know how to handle it. But if you don’t, better cut it out and pay your debt.

If you want to get out from Credit Card Debt, You always need to pay more than the minimum and stop using your credit card.


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  1. Pingback: Create Emergency Fund, 3rd Step to Financial Security | IMG (International Marketing Group) - Truly Rich Maker

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