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Monday, June 16, 2008

Debt

Debt is the money you owed. Many people will think that debt is bad and have cause many to bankrupt. If debt is bad, then why most of the organisation is having debt on their financial statement?

The truth is, if you know how to make use of debt, then its a good debt. If you borrow money just for spending or gambling, then its a bad debt.

Company borrow money from banks that charges interest but the company in turn use this debt to earn more than the interest charged by the bank. That is why its a good debt.

I have many friends who is having debt due to gambling and over-spending.

Gambling for leisure like playing mahjong for small bets with friends and family occasionally is fine and I am sure you won't end up in debt for this. Buying little bit of lottery to try your luck is fine as well.

So how did my friend ended up in debt? That is because they will spend their weekend staying over night to play mahjong and the bets is big. Sometime when they don't have money to pay, they will start to give excuse and the debts start here.

Shopping for necessity is also healthy as it will make you look fresh in your new clothes and make-up and accessories. But buying what you don't need is a waste of money. The worst will be buying with other people money because you have not get your paycheck yet. That is when you use your credit card to pay for stuff you don't have money to pay for. Beware of the interest rate that you got to pay if you don't pay in full for the month.

I am not saying credit card is bad, as I like to use credit card very much as it give me petrol and dining discount, it will give me a monthly statement on what I have spend on. It will give you rewards point that can be exchange for shopping vouchers.

So my advise is: Don't Gamble and Don't Spend unnecessarily.

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