Posts Tagged depreciation

How Debt Impacts Your Net Worth

For many people, the word “debt” always carries a negative connotation. This post by Credit Sesame on the MintLife Blog puts the concept of debt into perspective. If used properly and under the right circumstances, debt can actually increase your net worth. From the article:

Don’t blame debt. It’s not debt that is bad. It is how you use it that matters.
Here are some tips on managing your debt so that it doesn’t end up hurting your net worth.
-When financing, investments are the only thing that can have a positive impact on net worth
-Never finance any item that is consumed immediately (e.g. dinner, vacations, etc.)
-Durable consumer purchases (e.g. TVs, cars, iPads, etc.) can never improve your net worth because they depreciate
-Always factor finance costs into the cost of a financed consumer purchase
-Debt used to finance consumer purchase should be repaid before the you stop enjoying the benefit.

Be sure to read the full article. Also, Mint has some great tools for tracking your net worth. Read my previous post explaining why I use Mint to manage and track my finances.

via How Debt Impacts Your Net Worth | MintLife Blog | Personal Finance News & Advice.

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