Tuesday, October 01, 2019

While most of us equate 'debt' with a negative connotation, certain kinds of debt can be used as a financial management tool. A recent LightStream survey conducted by Wakefield Research found that 79 percent of Americans with good credit (Credit Score: 660+) believe taking on debt purposefully can help them accomplish their goals. With this in mind, LightStream offers the following tips to take on and manage purposeful debt:  

Budget, budget, budget. Inventory your debts so you know who you owe, and the interest costs you are paying. Calculate to make sure your income can support the added expense. Make sure that as you plan, you include all of the assets you have built through savings, home equity and other earnings. Avoid spending all your savings, as this could cause financial hardship in a future emergency. Investopedia reports that "most financial experts end up suggesting you need a cash stash equal to six months of expenses." With a clear financial picture, you can determine how much debt can be eliminated by tapping existing resources and how much additional financial assistance may be necessary to reduce carrying costs and meet your goals.

Lay the groundwork. Eighty-nine percent of those surveyed with good credit say they would prepare before taking on purposeful debt. Almost one in two would check their credit score (47 percent). Many also say they would consult a financial professional (27 percent), seek advice from a family member (23 percent), and/or research company rates and reviews online (25 percent). 

Consolidate your debt. Managing debt can seem daunting, but a cost-reducing solution like a debt consolidation loan is a great option. It allows borrowers to immediately pay off high-interest debt at a lower, fixed interest rate.

SOURCE SunTrust Banks, Inc.

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