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Vital Signs: Good Debt vs. Bad Debt - PPA Today

Vital Signs: Good Debt vs. Bad Debt

Dear PPA Member,

We don't need to tell you how the global economy impacts our daily lives and businesses. You already know what's going on; in fact, you're living through it right now.

Here's the reality we sometimes forget when the media is screaming about how bad things are: the world still turns, the sun still comes up, and we still go to work every day. We are all trying to focus on today and our future plans to stay in business. And your future plans, believe it or not, involve debt.

Debt. The word alone tends to churn the average business owner's stomach (and let's be honest-these days, our stomachs don't need any help in that department). But debt comes with business, and understanding how it works can help keep your business on track.

That's what this week's article covers: good debt, bad debt, and what we need to know to make the most of our current financial situations. We hope this helps you discover something new about your business, which is why we offer you Vital Signs each week. A strong foundation of business knowledge can help you avoid the "bad debt" that plagues many.

Here's hoping that better economic news is in our future. But no matter what the future holds, rest assured that PPA will be doing everything we can to help you weather any situation.

Sincerely,

Al Hopper, Director of Membership

1 Comments

For consumers to substantially limit their dependency on borrowed funds such as payday loans or the various other loans available, they should know the difference between good and bad debt. With the average American possessing over $9200 in consumer credit card debt, American families have significantly reduced their potential retirement earnings and many aren't able to save at all. This causes some serious concern for many Americans, and a likely future financial crisis for our country. By understanding the differences between good and bad debt, we can make smarter choices that will positively affect our futures. To give an example: good debt is a debt that returns some monetary benefit where as bad debt doesn't. Comparing the differences between buying and owning a home illustrates the differences perfectly. When buying a home, you have the added benefit of establishing equity with each monthly home mortgage payment as well as by the appreciation of the property which has a returnable cash value. When renting, you never see a return on your monthly payment. Buying a home is good debt. Renting a home or apartment would be considered bad debt. Another example is payday loans. According to the article I read, payday loans can be considered as either good or bad debt depending on the way in which they are used. If using a payday loan for the purchase of unnecessary merchandise or a vacation, this would be considered bad debt but if you are using them constructively to avoid late payment and the penalty fees associated therewith, payday loans can actually save you money, making them a good debt. You can read more in the article posted on the payday loan blog at personalmoneystore.com



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This page contains a single entry by Professional Photographers of America (PPA) published on October 16, 2008 9:30 PM.

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