Personal Finance in Your 20s & 30s For Dummies, 3rd Edition

Chapter 3

Using Loans and Paying Down Debts

IN THIS CHAPTER

Understanding the best uses for debt

Tackling student-loan debt

Planning strategies for paying off credit-card debt

Seeking relief from extreme debt

Borrowing money and taking on debt is like using a chainsaw. With proper training and safety precautions, a chainsaw can be a useful tool. In the hands of an insufficiently trained user or when used in the wrong situations, this otherwise helpful tool can do serious damage. The same can be said for borrowing money. Used sensibly, loans can help you accomplish important goals — such as furthering your education, buying real estate, or expanding your business — and boost your net worth over time. Unfortunately, taking on debt can also cause problems: living beyond your means, borrowing against your future earnings, and lowering your longer-term net worth. Too much debt and the wrong kind of high-cost debt can also cause personal stress.

In this chapter, I help you understand the best uses for loans and what debts to avoid. I also explain how to deal with and vanquish student-loan ...