So what is bad debt?
While the term itself is not one we love to use, bad debt can be defined as any debt that comes with a high-interest rate. From payday loans to credit cards to personal loans, it can quickly add up and leave you feeling drowning in debt.
The first step in getting your head above water is to assess your entire situation and ask yourself why? Were you living outside your means or was it a careless oversight? Or was it because of an emergency and it was a necessary solution?
Then take action. Come up with a plan that is realistic and is something you can stick to. Maybe that means paying down your smallest debts first or perhaps it looks like setting up a meeting with a counselor that can help you determine a debt management plan. Depending on the type of debt you are paying off, investigating refinancing might also be an option.
Good debt or bad debt—when you honestly address how you got into the situation, you can take accountability, and start to make a plan on how to pay off the debt. This approach is one you can carry on your financial journey to meet your future goals.
In my last post, I discussed savings vs debts, and it offers a few more tips on how to approach paying down your debt.
Financial advice for real people, by real people. You shouldn't need a degree to understand your money. Join Head of Education, Brittney Castro and Altruist mentors as they break down financial tips and strategies in a real way to help you finally understand how to achieve your financial goals faster.
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