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*Clients that are able to make the monthly program payments generally experience a 50% reduction of their enrolled balance before fees, or approximately a 29% reduction after payment of fees over a 24-48 month period. Individual results may vary based on ability to save sufficient funds and complete the program, the creditors in your individual portfolio, and amount of debt enrolled. Statements made are examples of past performance and are not intended to be a guarantee that your debt balances will be lowered by a specific amount or percentage, that you will be debt free within a specific time period, or a guarantee of future settlement results. Debtmerica, LLC guarantees it will not receive any fees until the terms of your debt have been altered with one or more of your creditors. While our programs work aggressively to reduce your debt balances, creditors are under no contractual obligation to negotiate or accept settlement offers. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice and we do not provide credit repair services. Please contact a tax professional to discuss tax consequences of debt settlement. By providing your contact information, you agree to receive return telephone calls, emails or other communications from Debtmerica, LLC and/or its affiliates and expressly waive any “No Call” preference or registration. Photographs used are not actual clients. Debtmerica, LLC is not affiliated with MSNBC, Fox, CBS, 500/5000 or OCBJ and logos used are registered trademarks of their respective owners. Programs not available in all states. Read and understand all program materials prior to your enrollment.
Purpose Driven Debt
Written by Harry Langenberg - Debtmerica COO
We are all aware that America’s appetite for too much personal debt ran our economy into the ground recently. Since the great banking collapse of 2008 we have been bombarded with the message that taking on any type of debt is a downright bad idea. In fact, the very four letter word, D-E-B-T, now carries a stigma that stinks like rotten eggs. But as with any cycle of mainstream culture, our views towards debt may have deviated well past a fair trial. In fact, given the awful reputation that personal debt has these days, the jury is out on whether it could actually be an undervalued asset worthy of a second chance.
While taking on too much personal debt is generally considered toxic towards our financial well being, there are many cases where taking on debt is useful, sensible and can even be very rewarding. This blog challenges some of these negative preconceived notions towards debt and presents some positive reasoning behind spending decisions that help clarify the gray line between “Good Debt” and “Bad Debt.”
Debt may be considered good and beneficial when its use has the right motivational drivers behind it. Debt with a good purpose can help a small business grow and earn more money, it can improve a family’s quality of life or health, or it can secure one’s education or professional vocational skills. Debt is bad and strenuous when it has no constructive purpose. Bad debt is generally taken on for short-term gratification, carries little opportunity for gaining value in the long run, and often comes with ugly terms. Being able to differentiate between purpose driven debt and gratification driven debt is key to using debt as a tool for success, rather than falling through the trap doors.
Regardless of what type of spending we do, most of us will come to a crossroads where we decide whether a purchase is worth the obligation to pay it back. The more rational side of us will ask, “Do I really need this”, and “is it really worthwhile?” and the more gratification driven side of us, might conclude, “I deserve this” or “It shouldn’t take me that long to pay off.” The following are specific drivers of debt that have a good motivation and honorable purpose, often aiming to enrich one’s overall circumstances or quality of life:
Family and the Hearth
Investing in the foundation and future of your family’s well being is a wonderful purpose for considering debt, as long as the terms of the loan are stable and well within budgeted means. One of the first major purchases a married couple makes together is investing in a home for their growing family, where a mortgage is often obtained to secure the property. Another big purchase families make together is a family car to transport children to and from school and activities. Accessing an auto loan to buy a reliable and safe vehicle can greatly improve convenience and mobility for the family.
Career and Your Business
Your business or job is one of your major sources of income, thus it is important that you invest money into maintaining it and growing it when possible. Taking out a loan to start or expand a business with the intention that you will be making more money than you will be paying for the loan is an example of debt driven by a sensible purpose. Sophisticated companies are constantly borrowing to grow and make strategic investments. These same principles apply to individuals and entrepreneurs with the experience and know-how to advance their careers and businesses.
Education and Learning
Most people take out a student loan to finance their college tuition. A higher education degree should result in more career opportunities and a higher income level down the road. Purchasing tickets to a conference to educate oneself on a certain topic or borrowing to enroll in a vocational training course are examples of debts that are used to help secure one’s professional standing and income. Also, investing in your child’s education and hobbies is another example of purpose driven debt with long lasting benefits.
Protection and Security
Insurance is a great example of a product that provides different types of protection and is generally financed to some degree. Different types of insurance plans provide protection for one’s family, income, car, life, and home. We often have the option of laying down a big up-front premium payment to cover such protection for multiple months or years in advance. Choosing the full premium payment is simply not realistic for many families, and so taking on a monthly payment obligation to support these protective products just makes sense, as long as the terms are reasonable.
Health and Wellness
One of the most important things to consider is your health and wellness. Gym memberships improve your quality of life. When people work out they feel good, they are more productive at work, and exercise may even improve their personal relationships. Also, taking on debt for medical solutions, such as a vital treatment for a loved ones health, is priceless. You can’t place a dollar sign on someone’s health or life!
Although this blog is meant to change your perspective on the dreaded four letter word D-E-B-T, its intention is not to encourage readers to falsely justify frivolous spending. Unless you have a large bank account with a lot of C-A-S-H you need to consider the motivations and drivers behind each purchase. The key message here is to remember that whether we are making short term or long term spending decisions, we need to evaluate the purpose behind the particular purchase we are making, and examine the future benefits of the bounty.
So, whether you are at the check out counter ready to whip out your credit card to purchase that new pair of leather shoes or you are at the bank ready to sign on that dotted line to purchase a new home, remember to ask yourself these questions, “What am I trying to accomplish by bringing on this debt?” “What purpose am I trying to achieve over the short term or long term with this debt?” and “Are the terms of the debt I am taking on sensible and conducive to enriching my overall financial plan?”
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About Debtmerica
Debtmerica is a leading debt settlement company that offers assistance to individuals and families who are experiencing financial difficulties and hardship.
We offer debt resolution programs that specialize in negotiated debt settlement that assists clients by reducing debt balances while providing an affordable monthly payment.
Our professional and knowledgeable staff has helped thousands of consumers get back on their feet financially.
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Debtmerica has had one vision since inception - to help Americans nationwide attain financial independence. At Debtmerica, we're proud of our achievements and honors. They represent our commitment to our vision and clients. |
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Top Articles to Help You Lead A Debt-Free Life
- Debt Consolidation: “Debt Consolidation” is one of the most commonly misunderstood and misinterpreted personal finance strategies that consumers inquire about all the time. While some view it as a method of taking on new loans, others see it as a debt relief alternative. It is more important than ever for inquisitive consumers to have a very strong understanding of exactly what debt consolidation entails, and the impacts it can have on personal finances.
- Debt Relief: Debt relief is defined as a partial or total forgiveness of debt. When the term is used by the government, it usually refers to the forgiveness of debt to underdeveloped countries. Recently, it has begun to refer to the millions of consumers who are overwhelmed with debt seeking financial relief from their unsecured debt.
- Credit Card Debt: Credit card debt is an example of unsecured consumer debt, accessed through credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.
- Debt Settlement: Debt settlement programs use a third party to negotiate lower balances and interest rates on unsecured debt. This type of debt management plan helps provide consumers an alternative to bankruptcy while reducing your outstanding debt.
- Credit Counseling: There are a numerous options for consumers who want to start getting their finances under control after accumulating large amounts of debt, which could inevitably lead to credit problems further down the road. Consumers who are in control of most aspects of their finances, but still feel like they could use additional help managing their debt burden, could certainly benefit from the assistance of a consumer credit counseling service.
- How Do I Get Out of Debt?: Now that the national economy is beginning to recover and people are having a better time dealing with their personal finances, many consumers who found themselves sunk deep in debt over the last few years may be asking themselves the question, “How do I get out of debt?” Fortunately, there are a number of avenues consumers can take to get out of debt, each with benefits and drawbacks depending on how quickly people need to fix their financial problems.
- 10 Tips to Avoid the Debt Trap: Have you ever thought about why so many of the people you know are struggling with debt? Do you ever wonder why banks keep lending to certain individuals, even when they are falling behind on their payments? Did you know that debt problems are a leading cause of major societal problems, such as stress, divorce and alcoholism?
- Credit Management: Many consumers are finding themselves buried under a pile of mounting debt. With interest accumulating month after month in addition to late fees being charged, many consumers are finding it difficult to make just the minimum payments on their credit cards. Although this may seem like an endless battle, with a strict budget and some discipline there are credit management strategies and solutions that will allow consumers to reduce or even eliminate their debt.
- Credit Card Debt Reduction: In recent months, many Americans have made a greater effort to seek credit card debt reduction and reduce the balances they owe, but some may not know where to start. Fortunately, there are several options available for consumers thathave a financial goal to achieve credit card debt reduction.
- Credit problems: Paying down high levels of debt is one of the best ways to improve credit problems and increase one’s credit standing. But many people cannot do that so quickly, especially in this economy. About one-third of a credit score is based off of a credit utilization ratio, which is the total creditbalances divided by the total credit limits. A great target is to use no more than 30% of one’s available credit.
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