Myths About Debt and Avoiding It
There are few people without debt. Even the rich have debt, although, less of it, maybe. Usually, the poor and middle class have debt. The first rule is if you must borrow money, go with the least amount. When buying a house, make the biggest down payment you can.
Usually, debt incurred before or after a marriage belongs to ever the debtor is and not the ex-spouse. Debt incurred during a marriage almost always belongs to either party. After a divorce, depending on the divorce decree, a debt of one spouse might to assigned to another as part as bargaining tool. It varies from state to state from country to country. Whatever credit balances you have from charges on cards, pay them off as soon as possible to avoid the high recurring interest rates and avoid missing payment dates.
If you have kids going to college, file the FAFSA form to apply for loans, even if you are making $100,000 or more. Last year, 40% of those families making that did not think they could qualify. Wrong. Many of the available loans have to limits to income. Check out Stafford loans. Try to get the federal loan rather than a private, the federal loans are lower interest and more flexible.
Never miss a mortgage payment, if you do, your credit rating will take a hit.
If you are rich, don't expect to get credit any cheaper than if you were poor. Credit cards with awards or points that can be used are usually starting at 11% and can reach 16%, while cards with no rewards often have only 7-9% APR. So, if its an issue, avoid cards offering rewards for their use.
Everyone should know what their credit score is, its just knowledge. If the score is less than 600, most loan companies will consider you a risk, what you want is to have a score of 700 or more. This is especially true if you are buying a home. Make your credit payments on time to avoid late fees of $35 or more, but as far as the credit score, late payments are not reported until they are AFTER 30 days the due date.
The big appeal of owning a home is being able to deduct the interest of the mortgage loan, but if your mortgage is more than $1,000,000, you can only deduct 50% of the interest paid.
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