Hello! Welcome to Cashflow Connect.
This is a series on financial wellness, where we cater to a diverse group, on topics ranging from mastering spending habits to unraveling the intricacies of capital. Please enjoy the first episode of our podcast! If you’d prefer to read this article, check it out here.
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Most of us are familiar with debt in some form. Be it student loans or credit cards, debt is an integral part of our lives.
But what does it actually mean to take on debt? In this feature, we will dive into some of the common aspects of debt, how the various types differ, and how to evaluate whether a debt transaction is in your best interest.
Debt is an essential part of personal finance, as it can provide valuable leverage for individuals to obtain the assets they need, like homes and education.
While it might seem commonplace in a mature economy like the US, credit is not as widely available in most developing parts of the world. Debt products also do not have as many sophisticated types to choose from.
From a wider economic perspective, a stable financial market, and a positive growth outlook can increase the availability of credit and debt. This is turn stimulates spending on necessary assets, enabling class mobility for many population groups.
Mismanaging your debts, on the other hand, can lead to significant consequences, like losing collateralized assets, being disqualified from certain types of credit due to a low credit score, and being locked out of a system that can enable upward mobility.
