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What is Debt?
Debt, in the Merriam dictionary is defined as "A state of owing."
In order to owe someone we would need to borrow from another party which usually means monetarily. This could be student loans, car loans, mortgages and the most common one; credit cards. How do we get in debt? We get in debt when we spend or borrow more than we can pay off. It becomes detrimental when payments are being missed because every time we miss a payment we receive a mark on our credit report and a ding on our credit score.
FICO Scores-(Fair Isaac & Co. Credit scoring) Scores that are given to determine your worthiness of being responsible and paying off your bills and debt on time. How many credit cards you have and whether the balance is high, charge offs etc. In this economy credit is used for everything.
Credit scores-
700+= Excellent credit
680-699=Good
620-679=OK
580-619=On the verge of bad
500-580=Bad
499 and Below=VERY bad
Where do you fall?
You might be saying, I don't need to pay off the debt or I'll just get another credit card and transfer my balance onto there. Well my friends doing that still makes you in debt and if you don't pay off your debt your life will be miserable with harassing collection companies calling you at home and even at work, letters to court, isn't it time to start paying off the debt? Even if you don't pay off your debt, it will haunt you for life and your children's lives and your children's children's lives and well, you probably get the picture.
The first step to getting out of debt is to be determined and willing to make whatever changes need to be made. Ask yourself,"How willing am I to do what it takes to get out of debt?"
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