There are many ways to slip into debt. You might become underemployed, suffer a salary reduction, divorce, high medical bills, or simply lack good money management skills.
These life problems don’t necessarily translate into debt. Good money management skills combined with the following three rule system can save you from financial difficulty…
- Use debt only to purchase assets that increase in value or produce more income than expenses. Debt used this way leverages your balance sheet which can be a valuable wealth building strategy, but it can also increase your risk so be careful.
- Never use credit to increase consumption. If you don’t have the money in the bank to pay for lifestyle expenses then you can’t afford it.
- Credit cards should only be used for transaction convenience and should be paid in full each month.
Thanks for reading.
Source: Financial mentor