Debt can be a major factor that holds people back from building their wealth and achieving financial freedom. In this video I partner up with Finance Dee, where we talk all things debt - living debt free, paying off debt, using credit cards and student loans.
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Finance Dee and I both have different experiences with debt - with the exception of a UK student loan I am living (and have lived) debt free up to this point in my life. I use credit cards but pay them off regularly. Dee has had debt from credit cards and has had to work twards paying them off in order to achieve her financial freedom goals.
Debt does not always have to be the solution to your financial problems. You could first consider turning to other solutions, such as saving up money, applying for grants and/or scholarships, or crowdfunding. If you do end up needing to turn to debt, then consider whether the money you need to borrow is good debt (i.e. will allow you to move forward in life, make more money in your career etc.) or bad debt (no added financial value to your life).
Dee talks about her journey to paying off debt, which began when she took out her credit cards whilst living in the US and began to use them to make expensive purchases and as a solution when personal loan financing was not available to her. Having a plan was essential, so she made sure she was clear of what her end goal was, when she wanted to achieve it and where she was at the start in relation to the end.
Though she struggled with credit cards, there are some advantages to having a credit card, such as being able to build up a credit card and use it to obtain reward points which can later be spent on travel, cashback or other rewards. In order to do so, it is important that you manage your credit card properly by paying it off regularly and only using it to buy items that you have budgeted and can afford.
Finally, we see how the traditional student loan system differs greatly from the UK student loan system. Whereas in the US and many countries in Europe it is encouraged to pay off debt early and as soon as possible, in the UK the system works very differently. The repayment conditions are currently very generous and the majority of UK students will not pay off their loan in full before it is forgiven, and will also typically pay back less than the full balance of their student loan over their life time.
Contents:
0:00 - Intro
2:07 - Problems caused by debt
2:51 - Alternatives to debt
5:13 - What is good debt
7:32 - What is bad debt
8:18 - Working towards becoming debt free
12:09 - Credit card advantages
14:16 - Good credit card management
15:43 - Student loans (US and Europe)
17:16 - Student loans (UK)
21:31 - Conclusion
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DISCLAIMER: The opinions and views shared on this channel are for entertainment and educational purposes only and are not to be taken as financial advice. Always conduct your own research prior to making any financial decision. Millennials With Money cannot be held responsible for any financial loss incurred from any decisions you make following this video.
Instrumental by Kid Ocean (Instagram @kidoceanbeats)
