If you find yourself in debt, don't panic: there are steps you can take now to start improving your financial health. A few factors are important to consider as you evaluate your debt. Is a portion considered “good debt,” such as a student loan to pay for college? Do some loans have significantly higher interest rates than others? After taking questions like these into consideration, you also need to calculate exactly how much money you owe and start a savings plan to pay it back. Finally, once you've started getting yourself out of debt, you can begin rebuilding your overall financial health and get yourself back in good standing.
Not all debt is created equal, and no matter what your financial circumstances may be, it pays to have a thorough understanding of debt. Take the quiz to test — and improve — your debt knowledge.
Interest is a fee that you pay to a lender in exchange for using borrowed funds.
Interest is a fee you pay to your lender in exchange for the right to use the borrowed funds.
A student loan could be considered a kind of investment in your future that will allow you to earn more money later, making it a good kind of debt. However, it is not a guarantee.
A student loan could be considered good debt because it has the potential to earn you more money later, though it is not a guarantee.
Calculating your debt-to-income ratio will indicate whether your debt load is more than you can afford.
By comparing the amount you owe to the amount you earn — a calculation known as your debt-to-income ratio — you can determine whether your debt load is more than you can afford.
You calculate net worth by subtracting your liabilities (such as debts) from your assets (savings/assets).
You calculate net worth by subtracting your liabilities (such as debts) from your assets (savings/assets).
Where available, a secured credit card account is a line of credit that is 50 to 100 percent of a cash savings deposit. Credit-building loans of small amounts may also be an option.
Where available, a secured credit card account is a line of credit that is 50 to 100 percent of a cash savings deposit. Credit-building loans of small amounts may also be an option.
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You’re a debt master — check out these tips to stay successful.
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