Are all good actions for your financial future based on saving? Well, not necessarily, there are some where the debt is the protagonist.
Saving is important, but avoiding debt or paying off your debts in advance can also be .
When we consider the financial planning of our future, saving is a basic tool. We can use a large number of instruments, from savings insurance to pension plans or direct investment in assets, among others. However, two key factors, such as indebtedness and interest, can be negative instruments in the medium and long term. For this reason, avoiding interests today may be the best decision for your financial future .
There is no worse enemy of personal finances than indebtedness. Mind you, we must bear in mind that we are not talking about reasonable indebtedness, which at certain moments in life can be even beneficial, for example, when we acquire our first home.
When we talk about negative debt for our finances, we refer to those debts that we could have avoided or that entail a cost that burdens our personal economy .
There are many examples but we are going to focus on two of them.
The incorrect use of credit cards would be the first and one of the most common. Credit cards can be a beneficial tool well used. However, they can also become one of the worst enemies in your pocket .
It is very common to use the credit card to dispose of cash when it is not reached at the end of the month or when you have to face some expense. This, in addition to assuming a very high interest cost , generally ends with the snowball effect. We have finished covering an expense, but we open another as it does not reach us and we enter a spiral of economy on credit with a truly high cost .
The misuse of credit cards is one of the main reasons for over- indebtedness of domestic economies . If we take into account that from over-indebtedness to the collapse of personal finances there is only one step, we will quickly understand the reason why extreme care must be taken in the use of this tool.
It is obvious that a quick credit can solve an immediate problem, but the immediate solution of a problem if it becomes a medium and long term problem can be much worse.
Fast loans are expensive , but, but, non-payments on fast loans generate a spiral of delinquency that ends up exponentially multiplying the money that was available .
In the same way that happens with the cards, but with more reservations, this type of tools must be used with head. Only in case of necessity, and only in case of absolute certainty that your return will not be a real problem for our personal economy.