Financial management edited

Financial Management
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My debt Analysis
A borrower’s debt is simply the amount of money the borrower owes the lender. Credit is
a kind of short-term debt that may be used to pay for food or a weekly trip to the supermarket.
Credit is the ability to buy something now and pay it back, often once a month, via a credit card.
The ability to earn cashback or exchange reward points for gift cards is one of the perks of using
credit. Individuals might be enticed to go above their budget and wind up with debt they can’t
pay off. In addition to the original purchase price, they now owe interest on the unpaid amount,
resulting in increased expenditures. When a significant quantity of money is borrowed and then
paid back over months or years, “debt” is used. Long-term credit may be used to buy a boat, a
house, a vehicle, or a camper.
Just a few minor assets secure my debts. I presently owe money on one and own it
entirely on another in terms of automobiles. Retirement and investment accounts are open to
both my spouse and me. Only one long-term credit is currently available to me. My initial loan
amount was $24,979.82, and it was due in 72 monthly installments over 72 months. I still owe
$22,603.09 on the Honda CRV I bought in March of this year. A 3.34 percent interest rate and a
monthly payment of $384.07 are the terms of my loan. When I finally pay off my automobile in
February 2024, USAA will have charged me $2,552 in interest. I reported all of my assets with
USAA when I applied for the loan. If I am unable to make the monthly payments on my car,
USAA will be entitled to confiscate all of my assets to cover the outstanding debt.
It’s not uncommon for the term “debt” to evoke feelings of shame or contempt. On the
other hand, debt may be used to develop wealth in a variety of ways. Investing in real estate is an
excellent place to start. The worth of a home fluctuates with the market, but it generally rises in
value with time. Starting a new firm with borrowed money is another method to amass riches.
New businesses are risky, but they also can be very rewarding. Throughout a lifetime, investing
in your or your spouse’s education may help you generate wealth. The National Centre for Social
and Economic Modelling at the University of Canberra estimates that those who drop out of
school after the 11th grade would have lifetime earnings of $1.2 million less than those who stay
in school into their 20s. Debt may be beneficial, but it’s always a good idea to consult with a
financial counselor who can help you through the process of buying a home, establishing a
company, or selecting a college loan (Invest, 2017).
When approving a loan application, banks employ the five C’s when assessing a
borrower’s character, credit history, ability, capital, collateral, and circumstances. My Experian
credit report indicates that my score is in the 740-799 area, which is considered excellent.
Because of a few things that have dragged down my rating, I now have a credit score of 790.
Getting a loan is difficult for me since I don’t have a history of paying them back, and my credit
record shows too many requests. However, none of my bills is past due, and my credit card debt
is manageable (Experian, 2018). I’m in a position to make my current debt payments and any
further ones that may come my way. A healthy debt-to-income ratio falls below the limit of 36%,
which is what I have (Bankrate, 2018). I own one car, which is valued at a little over $8,000, and
that’s all I’ve got. Because I don’t have much in the way of collateral, this may be a deal-breaker.
Since I have CDs, savings, and investment accounts, I have some monetary resources. If my
husband were to lose his work, he and I would still be able to make the loan payments since we
would still have money to fall back on. Banks could inquire why I’m seeking a loan or if there
are any conditions attached to it. If there are any repayment issues, a bank wants to know about
them. I can’t prevent a downturn in the economy, but I can prepare for it. I’ll be alright if I have a
cushion to fall back on (Wells, 1999- 2018).
I’ve reviewed my five C’s and have concluded that I’m not a default risk (World, 2010).
My disability benefits will continue to pay for my husband and me for the rest of our lives. A
considerable portion of our wealth is invested and saved. If the necessity arose, we could quickly
liquidate a few of our holdings. Also, I have a high credit rating and a history of timely payments
on my credit card accounts. Finally, I have a low debt-to-income ratio, and my spouse is in the
military, which provides him with a consistent salary.
An amusing skit by Tim Clue pokes fun at the subject of personal debt. Time Clue is
hilarious because he is gifted, not vulgar, and tells it like it is. As he discusses the real-world
consequences of debt, he gives lighthearted entertainment. However, although Time Clue
routinely makes light of debt collectors, the fact is that having a collector phone you is not
amusing at all. Unfortunately, debt is ubiquitous, and credit card debt may rapidly take over a
person’s life. When he jokes about firms mailing credit cards to those who didn’t ask for them,
it’s a nice touch (Clue, 2007). This is amusing since I get a credit card in the mail from a
different firm every month. Thank glad I’m a responsible person and threw out my credit card.
Bankrate. (2018). Debt to Income Ratio Calculator. Retrieved from
Clue, T. (2007, July 24). Tim Clue on Debt. Retrieved from
Experian Information Solutions, Inc. (2018, April 05). What Is a Good Credit Score? Retrieved
Invest Blue. (2017, August 1). Four ways debt can help you build wealth. Retrieved from
Wells Fargo. (1999-2018). Know what lenders look for. Retrieved from

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