Finances & Money

Debt Is Not Necessarily a Bad Thing

Have you found yourself stressing out over becoming free of debt? Are you convinced that, given your current circumstances, this goal is practically impossible?

The web is filled with well-intentioned articles, just as our bookstores are, on how to become debt-free. We spend countless hours in a fantasy make-believe world dreaming of this. Can we justifiably attest to this being reality? No.

Common sense should prevail for the readers of this article. Some people are situated such that they can live a virtual debt-free existence. For the majority of us, it just isn’t so. Let’s look at debt with a new perspective.

Out of Our Control

2017, here in the United States, saw Mother Nature at her worst in quite some time. According to the National Oceanic and Atmospheric Administration, severe weather brought with it $306 billion in damages. 2017 is now the most expensive year in history in the United States for weather damage.

Three hurricanes that hit the states account for a majority of the financial damage; those being hurricanes Harvey, Maria, and Irma. The unfortunate people who found themselves in the paths of these destructive storms were given fair warning to protect their lives. However, only so much could be done to protect property.

Hence, no human being has the power to stop Mother Nature. Many people are still reeling from the damage done, and it will take many of them years to recover. The financial toll these types of storms take on the population is astonishing. It was out of their control.

Why Debt Is Not Always Bad

A married couple purchased a home, and have come to the point where they owe, lets say $15,000 on the mortgage. Having instilled in them both the importance of setting up a savings account at a young age, they have $17,000 in savings.

They probably would be tempted to empty their savings account to payoff the remainder of their mortgage. That way, they truly own the home. This would be a mistake.

The remaining $2,000 would be insufficient to cover a major event in their life. The purpose of saving that money was for emergencies. In this case, having debt is not an issue and is preferential to being “debt-free”.

Consumer Rights

A common misunderstanding is prevalent in our society today that centers around payday loans. Consumers conjure up an image of a shady individual behind a plate glass window taking someone’s information, running it through their system, offering a loan at illegal interest rates.

Then, if the customer fails to pay back the loan, people seem to think an SUV with tinted windows will stalk their home in the early hours, with the occupants waiting to pounce on the unsuspecting loan customer. This is not an accurate representation of the industry, far from it.

Take the example given of a natural disaster. If you found yourself a victim of Mother Nature, and needed a sum of money quickly to pay for basic necessities, it may be that a payday loan is needed.

The good news is that consumers can learn more about their rights as it pertains to loans. Regardless if you are risk averse, risk neutral, or risk seeking; there may come a time when this is an option that bears consideration.

To the surprise of many, this industry is heavily regulated. Any fear that a consumer has of investigating this possibility should be cast to the side, as the laws in place protect each consumer who uses their services.

If the “unexpected” happens and you do not have sufficient savings to cover, it’s good to know that this option exists and is regulated by the government.

 

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Susan Paige

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