There’s A Way Out
Once you’ve built up a significant amount of debt, it might seem like there’s no way out of the cycle of debt, but we have good news for you: there’s always a way out of debt. At Envision, our financial debt advisors can work with you and the institutions you owe to come up with a payment plan that works for your current financial situation.
While it’s tempting to paint the institutions you owe as evil corporations that want their pound of flesh, the fact is they do not want you to fail. They just want to get paid like any other business and most of them are more than willing to work with you to come up with a payment plan that works for you. Our debt advisors can help you negotiate this process and help you strategize your debt payment plans to make sure you pay as little interest as possible.
Good Debt vs. Bad Debt
One of the most important things to remember about debt is that not all of it has a negative effect on your credit score. Good debt is debt that increases in value over time. For example, student loans make you a more valuable employee and raise your potential earnings, making them good debt (they also have one of the lowest interest rates and that interest is tax deductible). Mortgages are also good debt because, ideally, the value of your home should increase enough to offset the interest you pay.
Auto loans are another example of good debt, especially if you use the vehicle for business purposes (in which case it becomes a business expense, which is tax deductible). On the other hand, unlike houses, vehicles decrease in value as soon as they’re driven off the lot, so you’re better off paying as much of it as you can right away and making your last payment on the vehicle as soon as possible.
One of the most prominent examples of bad debt is credit card debt. It has one of the highest interest rates and it doesn’t increase in value. That’s why it’s best to pay the full amount of your credit card balance each month as soon as you get the bill.
While we’re always happy to help people who have taken on a significant amount of debt, we can also help before you take on debt. Whether you’re looking for ways to pay for your education (or your kid’s or grandkid’s education) or for a car or home, one of our financial life advisors can work with you to determine which type of loan works best for your financial situation so we can help make sure you don’t get overwhelmed by debt later on.