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BUSINESS Friday 26 July 2019
A25

Is your debt ‘good’ or ‘bad’? It depends

By SEAN PYLES and save on interest.
NerdWallet DEBT LOAD FROM 16% TO
Associated Press 39% OF INCOME: Debts in
Are student loans good this range get increasing-
debt that can open the ly difficult to pay off. You
door to a career or an in- may be able to make them
surmountable burden? Is all more affordable by reduc-
credit card debt a sign of ing interest or payments,
reckless spending, or can such as with a balance
it be a smart way to cover transfer credit card or a
an expense? In general, no personal loan. If you can’t
form of debt is inherently qualify for one of those, you
“good” or “bad.” What could explore a debt man-
makes it good or bad is agement plan with a non-
how it fits into your overall profit credit counselor.
financial picture. DEBT LOAD OF 40% OR
Good debt is manage- MORE OF INCOME: Debt
able within your budget loads this high can be in-
and can help you achieve surmountable. Use the
your goals. On the flip side, free consultations offered
bad debt is unaffordable by many nonprofit credit
and can overwhelm your counselors and bankruptcy
finances. attorneys to see if debt re-
Ask yourself these questions In this June 4, 2019, photo two people walk along the water in the early morning sunrise near lief might be right for you.
to determine if you’re deal- downtown Miami in Key Biscayne, Fla. BOTTOM LINE: Know how
ing with good or bad debt. Associated Press your debt compares with
Then see how you can people to become more ings. They can be benign ers avoid missed bills and your income and use that
manage it. resilient.” Student loans, if they’re helping you man- even eviction. perspective to understand
WHAT LED TO THE DEBT? for example, may enable age your overall financial IS YOUR DEBT AFFORDABLE? which approach is the most
The reason you took on a career that offers a high picture. Comparing your debt load logical.
debt can help you deter- salary, making you more fi- DUE TO AN EMERGENCY: with your gross income can HOW IS YOUR DEBT AFFECT-
mine whether it’s helpful or nancially sound. Desperation debt can be be a helpful tool for seeing ING YOUR LIFE?
harmful. Think about whether you in- dangerous. A need for if it’s manageable or be- Think about how debt is
“Any debt that is taken curred the debt: cash in a hurry can leave coming too large to tackle impacting your life overall,
on because people don’t TO ACHIEVE A LONG-TERM you with limited options on your own. Leaving aside says Thomas Nitzsche, me-
have any kind of choice GOAL: Student loans and and result in high interest mortgages and student dia manager at nonprofit
means they are starting auto loans can fit in this costs. loans, since they’re gen- credit counseling agency
out in a place of disadvan- category. These debts can BOTTOM LINE: Debt taken erally more manageable Money Management In-
tage,” says Ida Radem- help you move ahead in to achieve a goal or out of forms of debt, here are ternational. “If your debt is
acher, a vice president of life, so long as you don’t convenience can be useful some guidelines to con- something that is hanging
nonprofit think tank Aspen take on too much. as long as you have a plan sider: over your head and you’re
Institute. “That can create OUT OF CONVENIENCE: for paying it off . To avoid DEBT LOAD UP TO 15% OF worrying about it constant-
a spiral that can prevent These are debts you incur desperation debt, build an INCOME: This amount is like- ly, that’s something you
people from being resil- to make other aspects of emergency fund. A 2016 ly affordable but is worth should address,” he says.
ient.” your life easier, such as report from public policy addressing. If you’re carry- Any debt that affects your
Conversely, Rademach- when you have a big one- think tank Urban Institute ing a moderate credit card mental health or signifi-
er says, “the more help- time expense and don’t found that savings as small balance, for example, pay- cantly diminishes your qual-
ful forms of debt can help want to deplete your sav- as $250 can help consum- ing it off can free up cash ity of life is a bad debt.q

World stocks rise as ECB signals more stimulus coming

By ELAINE KURTENBACH tral banks around the world tries, particularly China.
Associated Press in trying to help growth Germany’s DAX rose 0.4%
BANGKOK (AP) — through a period of un- to 12,577 while France’s
World stocks turned higher certainties, including over CAC 40 gained 1% to
Tuesday after the Europe- trade disputes the U.S. is 5,660. Britain’s FTSE 100 was
an Central Bank signaled waging with several coun- up 0.4% at 7,530. q
it could cut interest rates
or provide other forms of
monetary stimulus to help
the economy.
The ECB, which sets interest
rates for the 19 countries
that use the euro, hinted
it could cut rates in com- A currency trader watches monitors at the foreign exchange
dealing room of the KEB Hana Bank headquarters in Seoul,
ing months and has asked South Korea, Thursday, July 25, 2019.
its staff to study a possible Associated Press
new round of bond pur- Stocks rose on the news en a currency.
chases, which add newly while and the euro In signaling more stimulus,
created money into the dropped, as looser mone- the ECB joins the U.S. Feder-
economy. tary policy tends to cheap- al Reserve and other cen-