Top 5 Myths About Debt

Wed, 31st March, 2010 - Posted by admin

Top 5 Myths About Debt

myth about debt

Debt has become the Godzilla of the 21st Century. It causes stress, hardship and worry if not dealt with. As the monster scratching at our door, a lot of myths about debt have sprung up. Actual debt can be scary enough! We don’t need to start worrying over the myths associated with it. Here are the top five myths about debt.

1. Everyone Is In Debt So What’s The Problem?

This should never be used as excuse to wallow in one’s debt. To some extent it is true, but being in debt does not mean that one is being consumed by debt. There are many people who are in debt but are in the process of paying these debts off responsibly. It’s very important to remember this distinction. Debts are not a social badge to wear with pride, they are temporary and something to be gotten rid of.

2. Bad Credit Ratings Are For Life

Not so. This is a common debt myth that needs to be debunked. Bad credit records have a lifespan of about six years. If you have such a rating, but have gotten out of debt, you can rebuild your rating pretty quickly by staying out of debt. Considering the stress that debt can create, it seems prudent to stay far away from it once you’ve gotten out from under.

3. Debt Consolidation Is For Losers

You know the old saying, pride comes before a fall. Well, this has never been more true than in regards to debt consolidation. Some consider this way out as a sign of stupidity or weakness. However, it’s important to note that big corporations and even multi-millionaires do this all the time. It’s simply a way to reduce interest on what you owe. It’s shrewd business sense, not a failing in any way.

4. Solitary Confinement

When overburdened by debt, it’s easy to develop a ‘me against the world’ attitude. Nothing could be further from the truth. There are many resources to help you deal with your debt. Banks often offer free advice. There are also companies and agencies that offer free consultation. Even credit card companies/issuers will often lower your interest rate and all you have to do is ask. Of course, they don’t advertise this feature because they want to keep you at a higher interest rate. But if you ask, most will lower your rate on the spot. Try it. You might be pleasantly surprised.

5. All Debt Is Bad Debt

Understandably, debt has become something of a dirty word these days but not all debt is bad debt. Home mortgages, car loans and so on are necessary debts one usually incurs in life. The bottom line is that debt is not a bad thing – if it’s temporary. Mortgages and loans get paid off over time and the same approach should be taken for all debt, which is why it’s so important to keep those credit card leashed before you get in over your head.

About the author

Andrew Salmon is contributor to many blogs with finance articles, including those on how to get a life insurance quote.

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