10 Hidden Truths About Debt You'd Wish You Knew Sooner

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For many people, debt is such a familiar part of life, and it feels like being in debt needs to come with some sense of wrongdoing. But, some debt secrets might completely change how you look at it and give you more control over making better financial decisions from now on.

Here are ten hidden truths about debt you might never have known otherwise.

Debt Isn’t Always Bad

Not all debt is bad—though many of us have been raised to believe as much. Some types of debt can help you in the longer term. For example, when you take a mortgage to buy a house, the home’s value increases. Learn about good and bad debt to know when to borrow or whether a loan is worthwhile.

Credit Cards Aren’t Evil

Credit cards are often portrayed as the devil’s handiwork in building debt. In reality, however, if used responsibly, credit cards can even work as powerful tools. They can aid in building credit, earning reward points and cash back, and protecting purchases. It is all about being mindful of using credit cards and not overspending.

Interest Rates Are Negotiable

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Generally, most people think that interest rates are non-negotiable. Of course, this perspective has its exceptions. So, if you are willing to do some research and negotiate, you may very well be able to score a lower interest rate from those lenders that may help you save hundreds, if not thousands, of dollars in the long run.

Debt Can Be Managed

Sometimes, debt seems impossible to manage, but always remember it is possible. Making a budget and staying on it, obtaining lower interest rates if applicable, and raising income can help you manage your debts properly. All you need is a little bit of patience and determination.

There Are Resources Available

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If you are in debt, there are people and tools to assist you. Non-profit credit counseling agencies, financial advisers, and debt consolidation can all help manage debt and create a plan for financial stability. Ask for help when you need it.

Debt Can Teach You

We can perceive debt as a fall and a chance to grow. Understanding how you got into debt and tips to avoid getting into debt again can prevent you from making the same decisions that have negatively impacted your finances.

Emergency Funds Are Essential

A way to limit taking on unnecessary debt is to have an emergency fund. There will always be unexpected expenses; having this money aside means you won’t need to rely on a credit card or loan. Brokers suggest preparing for at least three to six months of saved expenses in case some financial emergency forces you into early retirement.

Prioritizing Debts Can Save Money

Many people have multiple debts, and paying only the minimum on all of them can be tempting. That said, paying off high-interest debt before other debt can save you money over time by prioritizing your debts. As each debt is discharged, roll that monthly payment into the next highest-interest debt until all are gone.

Debt Doesn’t Define You

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Always remember that your loan is not you. It can seem overwhelming and stressful, but it does not determine your worth. Stay positive and focus on finding other ways to cope with your debts and pay them off.

Financial Habits Matter

Proper debt management is all about forming healthy financial habits. Your financial future depends on your ability to budget, save, and use debt wisely. These changes will likely have a significant financial impact on your overall situation.