The modern society is spoilt with so many enjoyment and amenities. There are so many consumables that are offered by providers and sellers. In fact, many billion dollars industries are based on customers’ emotional desires, instead of their actual necessity. It means that many of us are not living within our means. This increases the ownership of debt and emotional factor is often blamed as the actual thing that increases the amount of our personal debt. When it happens, we could spend much of our lives paying off those huge debts. It is important for us to create a life of prosperity and luxury, while being able to afford the good things in our lives.

There are huge differences in how average consumers and successful investors are using their credit. In this case, smart investors are able to use credits properly to leverage their overall investment exposure. It means that investors borrow money so they can invest and get more money. Successful investors won’t apply for loan if there’s no good chance of getting positive cash flow. On the other hand, average consumers may spend so much money on expensive electronic appliances and unnecessary costly cars to have the kind of lifestyle that they want. Designer clothes, 50-inch LED TV and others things that we can’t really afford could cause financial problems in the long run.

The overall message is quite simple. It means that we shouldn’t borrow money if we eventually end up spending many months or even years to pay it off. Many people have crippling debts. This could lead to depression, divorce and in some cases, suicides or chronic illness. Many people find reprieve only when they get new loans or fresh credit cards. However, it also means that the actual amount of debt will become even larger. We should exercise extreme caution when choosing debt elimination program. Often, we are able to solve our problems by simply evaluating our overall cash flow.

Many lenders could be unscrupulous enough that they want to make things “easier” for us by allowing to pay only the interest and very little of the principal. It means that we have become their milk cow and they will get payments from almost indefinitely. So, it is important to not get brainwashed by the supposedly soft payment program. Often, it is intended to avoid the debt from getting paid off completely. We should also pay loans early to avoid incurring late fees. In this case, charges and late fees are also huge sources of income for many lenders, so it is important for us to prevent them from getting more of our money.

By understanding the above things, we should be able to save a few extra hundreds of dollars each month and we are still able to repay a decent amount of the principal. The extra money should be transferred to our investment account and this is important if we don’t want to become cash-strapped individual in the long run.

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