Critical Thinking About Debt

Critical Thinking About Debt

Critical Thinking About Debt

A Critical Thinking About Debt helps you remain in control of your debts. First, debt is anything you owe others. That applies to whether business or personal.

Most of us argue with the question: “to pick debt or not?”

The average interest Americans pay on their cards stands at 16.46%. Demographically, it’s Americans roughly from 35-to-65 who have amassed the most credit card debt. Generation X and baby boomers have accumulated $7,750 and $7,550 per person in credit card debt, according to data from Experian (EXPGY.Feb 14, 2019

Let me shelf that question for now, and get into a more critical bit.

Debt is not bad, it is an avenue that you explore towards making your ends meet. The worst thing that can happen with debt is when you’re unable to settle the obligations attached to it.


Close to 4% of loans advanced go bad


That’s where the risk comes in

Critical Thinking About Risk


When you fail to repay within the deadline, you risk penalties. You can also have the Lender take action against you, leaving you with greater losses of valued properties. Those are for instance a vehicle, a parcel of land or any other asset that you may have pledged as collateral.

The best way to ply your routes with debt is to ensure that your game-plan gives you wins. Therefore, that does away with the notion that debt is bad.

Every time money mathematics is done, ensure your variables are smart. When you do smart mathematics with your debt acquisition and disposal, that’s it. Look at the end product. Do you have a net gain or a net loss? Go for deals with net gains and ditch those with net losses.

The other key factor you need to consider with debt is whether you can pay or not? Is the weight of your prospective debt one that you can handle adequately? Ideally, do not overburden yourself with debts.

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We all like to have money.

For some of us, that includes getting a debt. but there is a great question you need to ask yourself each and every time when considering debt.

One, will the debt be channeled for a project.

Two, will the debt be channeled to entertainment or say, purchase of stuff that you can do without?

When a deal with net gains presents itself, pounce on it. That’s the essence in Critical Thinking About Debt

There’s one more thing to consider when wrangling whether to accrue debt or not. It’s the time value of money. In simplest terms, a dollar today is better than a dollar next year. Why so? People often say, “a bird at hand is worth two in the bush.” The same goes for money.

If you look at what the dollar could purchase ten years ago, there’s a drastic difference. That difference comes in to reinforce the need for cash-flow analysis vis a vis the duration it takes for money to land safely into your hands.

Always analyze your debt with the three metrics:

  • For one, consider the Net gain against net losses
  • Secondly, The risk involved in handling the entire debt process(what could go wrong or not). That’s the risk-return trade-off
  •  Last but not least, the time it takes for the cash to get back into your hands(Time value element)


Critical Thinking About Time

If you have avenues to obtain finance, go for them. Ensure you remain in business, for your benefit and not that of your financiers.

As some terms may be very daunting to you, get out and seek for information. That’s finance for you. The bottom line is, never struggle with the terms like Times interest earned, Debt refinancing and so forth. Beyond Google, reach out to a consultant. Eventually, you will gain something, even if it means over a cup of tea. You’ll have the complex terms explained to you.Critical Thinking About Loans

Conclusions on Critical Thinking About Debt:

Everybody picks debts. The best debt is the one that benefits you in the entire process. A good debt leaves you with:

  • a net gain
  • has lesser risk on your side, and
  • Takes the shortest time to relay cash back into your hands.

Here’s my personal word regarding your  Critical thoughts about debt:

Scrutinize your options thoroughly. If you can, work with cash terms,  if not explore debt options that benefit you. Explore avenues to use debt, wisely. That’s it.

As I sign out, here are four sayings to provoke your thinking about debts:


“The man who never has money enough to pay his debts has too much of something else.”
-James Lendall Basford


“I’m in debt. I am a true American.”
-Balki Bartokomous



“Interest on debts grow without rain.”
-Yiddish Proverb


“Creditors have better memories than debtors.”
-Benjamin Franklin
The list is amazing and endless… so here’s where you can surf for more to help you think critically about debts.

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