DEBT WEDS SAVINGS:: PART 1
Can Debt Wed Saving ?!
If they get wed what kind of relationship you expect? Happy & Harmonious!
Or Sad & Worrying!
This title is to give an overview for newly wed an planning to wed to understand household finance management. The two people with different backgrounds & different traits & character need to get along happily for a long term and understand the finance management is one of the important aspect
Let’s understand what is Debt & what is Saving first!
DEBT:
It is the amount of money borrowed as a loan, with certain conditions that the borrower owes to the lender along with interest till he completely pays back the loan.
Debt includes
1. Loan on mortgage of property or gold or any other valuable like home loan, car loan, property loan, Education loan etc. These are called UNSECURED LOANS or SECURED DEBT
2. The other type of loan is unsecured loans which are revolving and instalment based. This includes credit-card payment, PF-loan, grocery store loan (Pay all purchases in month during pay check), Though these are unsecured loans and if you don’t pay your credibility will be lost or your credit rating will come down.
3. With respect to credit cards, it is a revolving, they are open ended and mostly on a monthly basis, either in full or in instalment. As long as you recharge and your credit account is healthy you can borrow on a revolving basis & this is known as Revolving Debt.
4. On the other hand, Mortgage is mostly a long term debt (Except gold loan, which may be considered as a medium term loan). Here one need to mortgage his asset as a security till the loan is fully paid with interest
TO BE CONTD…..
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Interesting topic with knowledgable guidance 👍
How debt vs savings are scalable and accountable for achieving short term to long term goals
It is important to strike YOUR OWN BALANCE between DEBT & SAVINGS. However, you need to understand how you utilize your debt. As long as it is for bigger gains, it really make sense. For example Parents take Educational loan to send their children for higher studies, considering the potential rise in their income after higher education. This gives humangus advantage. However you need to careful in managing the debt. Similarly a shorterm saving can come in handy for your emergency needs. Lets say your Induction-Stove has suddenly started giving problems & you need to change. The short-term savings can come handy in meeting such emergency needs
Hence it is more of managing the available excess funds for debt as well as saving.
Let me creater a charter for you & hope it helps you
Individual financial situation, goals, and risk tolerance. Here are some key considerations:
1. Prioritize High-Interest Debt: Before focusing on savings, consider paying down high-interest debt (e.g., credit card debt) to save on interest costs.
2. Emergency Fund: Establish an emergency fund with 3-6 months’ worth of living expenses to provide a safety net for unexpected financial challenges.
3. Diversify Your Savings: Diversify your savings and investments for long-term goals to reduce risk and enhance returns.
4. Consult a Financial Advisor: Seek advice from a financial advisor to create a personalized financial plan that aligns with your objectives.
if you need any further clarification… please feel free to share, so that I can try to give a satisfying reply