If you don't owe anything to a credit card
company or a student loan provider, you're in a great position
to start investing. If you're like most people, however, you probably
have some debt attached to your name. But some types of debt are
riskier than others.
If you buy a stereo and put it on your credit
card, is there a good chance you'll still be paying it off a year
from now? By then, the technology will be practically obsolete.
And the longer it takes to pay off, the more the stereo will cost
you, since you will be paying interest — and probably lots of it — on your credit card balance.
That's the reason credit card debt is considered a financial liability.
If you have outstanding balances on one or more cards, it's a
good idea to pay them off as quickly as possible, especially if
the interest
rates on your cards are high.
Credit cards make it easy for
people to get into real debt trouble, since they let
you spend money you don't actually have. If you feel
overwhelmed by your debt, you can turn to a non-profit
credit counseling service such as The National Foundation
for Consumer Credit at www.nfcc.org.
You also have the option of arranging a consolidation
loan, so you'd pay only one monthly bill. Be aware,
however, that these loans often carry exorbitant interest
rates.
