Your Debt Isn’t a Death Sentence: Top Myths You Should Stop Buying Into

When it comes to debt, full-spectrum thinking often takes a backseat when it comes to this black-or-white matter. There’s good debt, and there is bad debt. If you don’t understand the ins and outs of secured, unsecured, and revolving debt or how it works, it is easy to get lost in the lies and myths surrounding this taboo subject. Fortunately, understanding debt and when to take it on doesn’t have to pose an impossible challenge. 

Whether you’ve come down with a nasty case of debt denial or debt fatigue, there’s light at the end of the tunnel, even despite the majority of Americans who fall prey to the hopeless feelings induced by accrued debt. As a first step in lifting the dark cloud of looming debt, debunk the myths that can lead you down a questionable financial path. 

Top Debt Myths You Should Stop Buying Into 

Credit Cards are The Root of all Financial Evil

Many people use their credit cards irresponsibly to purchase things that are either unneeded or can’t pay off, and when they do this, they accrue large amounts of debt. Due to this, many personal finance gurus are incredibly vocal about their dislike of credit cards or debts and make puffed-up statements to scare you away from using credit cards or accruing debt in any form. 

Many false statements circulating serve to dissuade you from getting a credit card or taking on debt. Despite the misinformation spewing from the mouths of personal finance specialists, you deserve the truth. Credit cards and debt are not inherently evil. By contrast, when used responsibly, they can be a great tool to assist you financially. For those interested in applying for a credit card (and using it responsibly), consider perusing the 1st financial bank reviews for more insight into building credit wisely. 

Having any Debt at All is Bad

Debt is a useful tool that, when managed, can help you in achieving financial and personal goals. One of the most common forms of debt that you hear about is student loan debt. In most circles, this form of debt is typically considered acceptable. In theory, student loan debt is good debt, as outsiders perceive this accrued debt as an investment in your future, which will help you land high-paying career opportunities that allow you to pay off this balance in a flash. Student loan debt is also beneficial in credit-building contexts, as they have one of the lowest interest rates and feature tax benefits. 

There are destructive forms of debt, and the top two are credit card and personal loan debt. Both of these forms of debt are accompanied by high-interest rates. If you can’t make the monthly payments, this debt can quickly get out of hand. 

Pay Off All of Your Debt as Soon as Possible 

Any debt that has a high-interest rate should be paid off as soon as possible, given that the longer you take to pay them off, the harder it will be to climb your way out of the sinkhole of financial instability. Debts with low-interest rates such as student loans or mortgages can lower your taxable income each year, which means it can be financially prudent to take your time paying them off. 

While you should continue to make the minimum monthly payments, fiscally-responsible debtors will also want to funnel extra income into emergency funds or other financial priorities. 

Checking Your Credit Score Will Lower it

You are entitled to one free credit report from each of the three credit-reporting agencies each year without affecting your credit score. However, viewing your credit score more often than this can lower your credit score. 

Checking your credit score is referred to as a pull. While the effect of one pull is negligible, banks view multiple pulls as a sign of financial distress. 

Late Payment Will Ruin Your Credit Score

You should strive always to pay your credit card bill on time, but if for some reason you do not, it isn’t a financial death sentence. Your credit score will not be affected by a late payment until 30 days have passed since the due date. So long as you pay your bill before the 30 days have expired, your credit score will sustain damage. 

When You Get Married, You’re Responsible For Your Spouse’s Debt 

Many couples believe that when they are married that their debt passes on to their spouse and vice-versa. Despite popular misconceptions, inheriting your significant other’s debt is not your inevitable doom, as the debt accrued before marriage belongs to the person who accrued it. 

Once the couple is married, if they decide to refinance their debt or consign, then the situation changes, and the debt belongs to the couple as a unit. 

Final Thoughts

Be wary of debt-related myths that can send you into a spiral unnecessarily. When chipping away at your debt, planting both feet firmly on the ground and viewing the situation through clear lenses is necessary.