March 21, 2024 7:51 am

It’s Velociraptor Appreciation Day

No, it’s Debt Awareness Week

Granted there’s a day, week or month for everything now. Velociraptor Appreciation Day – yes it’s a real thing. April 18th if you’re interested.

But today marks the scaly tail-end of Debt Awareness Week and this really is one to pause for. More so than Gummy Worm Day (July 15th), at least.

See, from overdrafts to mortgages, student loans and credit cards, most of us have somekind of debt in our lives and it’s no bad idea to review the red ink on your balance sheet.

Good debt / bad debt

We’re not here to demonise debt. Debt can be a vital and necessary lever, when pulled responsibly, to boost one’s future or situation or happiness.

That said, there is good debt (as above) and there is bad debt.

Bad debt, for example, is when you’ve little to show for your spending one month on. Bad debt is borrowing to splurge on living costs, entertainment and extras. On things that don’t improve life big-picture-wise.

Bad debt is also the kind of debt that costs more. The average credit card interest rate in Feb 2024, for example, was 26%. Overdrafts can levy charges as high as 40% interest.

Debt today & tomorrow

Courtesy of the Financial Planners at Money Means, here are two questions on two debt matters: a) the debt you have. And b) the debt you want to avoid …

a) the debt you have

1. Can you afford it? Rule of thumb, your total debt repayments shouldn’t exceed 40% of your income.

2. Can you reduce its cost? Explore moving a credit card balance to a 0% deal and, if you can, the money saved can go towards paying down your pile.

b) the debt you want to avoid

1. Before getting into (more) expensive debt, consider this: do you need to buy this thing? Really? Like, really really? Will it boost life in a meaningful way?

2. If the answers are yes, yes, yes and yes then try this: do you need this thing now? Right now? Really now? Why not delay and save up instead?

Debt impact

If you currently feel overwhelmed by debt then please know that StepChange is the UK’s largest debt charity and provide free debt advice. Contact them to see what’s possible.

Again, debt is not inherently bad but it’s worth being mindful whenever you’re poised to go deep(er) into the red. Most of us would probably agree that balances on credit cards, overdrafts and BNPL accounts tend to outlast the stuff they pay for.

So give our tips some thought and ask questions on social (links below) or email.

Oh and be sure to do so before Canoe Appreciation Month. It’s a biggie …

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