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How To Use Debt To Your Advantage

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Debt isn’t ideal, but you can certainly make the most of it. There are a lot of ways to use debt to your advantage.

Acquire Property

Easily the most strategic way to use debt to your advantage. Holding on to property for ten or more years is almost a sure-fire way to make some money. A mortgage is one of the kinds of debt most people think of as “good debt” because, managed responsibly, it makes you money. Equity in the home can build quickly, but even when it’s a slower market, you’re almost always going to profit if you hold on for a long time. Also, interest on a mortgage is usually tax deductible.

Start Your Own Company

With the internet and the rise of e-commerce, working for yourself has never been more accessible. You might want a business loan to purchase equipment, product inventory, or to hire staff. There is a lot of risk here, but if you have a niche talent or market opportunity, it could pay off, big time. Interest here might be tax-deductible as well. Depending on your state or province, there might be additional relief through government programs to help small businesses, minimizing the risk a bit.

Go Back to School

Student debt isn’t always the wisest idea. For example, if you’re stuck in a low-wage job and looking to increase your income, a four year philosophy degree might not be the best idea. But there are a lot of programs out there that can have a huge salary increase for minimal investment! A student loan can be a responsible way to use debt to your advantage. Some examples are:

  • Project Management Professional (PMP): this can cost anywhere from $1000-$3000ish and can be done in a couple of months. Glassdoor says Project Managers average around 82k in my area, and ZipRecruiter says they make around $125k in New York City. Of course, this won’t help if you don’t have a bit of business experience to begin with.
  • Scrum Master Certification: this cert costs about $1000-3000 as well, and can earn you over $100k. A bit of tech background is needed with this one. If you’re a low level data analyst or tech support person, this can be a huge leap.
  • Graduate certificate: There are a number of programs available for people with degrees that give certifications in specific areas. These can really boost income! Your local colleges are a great place to start looking, but many of these are also done online, in your own time.

Improve Your Credit Rating

I mentioned that at one point, my credit rating was in the low 500s and I had all R9 scores. I got a low-limit credit card with Capital One and slowly began to improve my credit. A friend of mine did the same with a car loan, but it cost her a lot more (her interest rate was 9% – yikes!). This can be an expensive way to build credit, and it’s risky, too. If you have bad habits with debt, using debt to improve your credit rating is not for you. Wait until you demonstrate some responsibility.

Paying off all your bills in full doesn’t give you great credit. It might actually mean that you have no credit rating at all. There are some credit cards with 0% interest rates, and those can be great for using debt to your own advantage!

 

 


A New Budget is Coming

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I’ve had several commenters request a new budget…and I will address that after the holidays. We have stuck to the Fall Budget. As previously mentioned I will have to add in a line item for Princess senior year of high school.

For the last several months, I have paid the minimum on my debts, put $100 into my EF and then saved all extra income. I really thought I was going to be in a REALLY good place going into 2020, and I was excited to decide what to do with the “extra.” But having a client not pay has really hurt.

I’m planning to run new averages on all my utilities and reevaluate our grocery budget. Now that we’ve got several months of being down to 2 kids and me under our belt, I think some of the numbers will change.

Ready for the Holidays

The holidays are covered. I’m about done with my shopping and planning for experience gifts for Christmas. Now I’m focused on recovering from my none paying client and building my stable of clients for the new year.

The only thing left is to decide on the Christmas tree. If you will recall, last year, we decided to go with a real tree. We will not be doing that this year. But I am also not convinced that I want a fake tree, especially one that I will have to store afterwards. Ugh!

I saw this picture on Facebook and thought we might could do something similar with supplies we have in our Christmas decor box. (We have a ladder like this already, inherited from my family.)

Princess told me I was a “sinner” to even consider not having a traditional tree. History Buff loved the idea. I think my compromise is to purchase a smaller 4′-ish tree from Dollar General for $15. Then if I don’t want to store it afterwards, I won’t feel so bad for donating it afterwards.

I love Christmas and I want to decorate…I’m just not convinced I want the traditional tree this year. But I guess I will break down and do it, I do still have kids at home. And I suppose their opinion matters some (that’s sarcastic.)


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