How to crush these four types of debt
Did you know that your credit card falls into a specific category of debt called “revolving” debt and your mortgage falls into a category of debt called “secured” debt?
Maybe you really don’t care at all – you just know that the debt you have is costing you money every month.
However, you might want to know the difference between secured debt, unsecured debt, revolving debt, and installment debt as it helps you understand the consequences if you forget to make a payment. Or worse, it helps you understand the consequences if you decide not to make your payments. at all. Let’s take a look at these four types of debt and how to deal with them.
What is secured debt?
When you take out secured debt, you have chosen a type of secured debt that you own. In other words, when you borrow from the bank to buy a house or a car, you don’t own what you bought – the bank does. The bank files a financial claim on your property with what is called a lien.
In addition, the bank can withdraw it from you if you stop making your payments. Let’s say you decide to build a beautiful 3000 square foot home. You can make your payments, no problem. However, let’s say you lose your job two years later and your partner must be struggling to make the payments on their own (and buy new shoes and groceries for the kids) while you search for a new job. If you can’t make your mortgage payments, a bank can foreclose your home, sell it, and use the proceeds from the sale of your home to pay off the debt.
What is unsecured debt?
As you can imagine, unsecured debt does not involve collateral. In other words, you don’t have to buy something you own in order to borrow.
Can you think of a great example of unsecured debt?
If student loans occur to you, great job. The pesky leftovers of a degree you earned years ago (in the form of student loan debt) provide a prime example of unsecured debt. You may want to consider unsecured student loans because if you stop paying off your student loans, your lender cannot take your degree away.
So, since your lender can’t foreclose your assets, what can they do if you suddenly stop making payments on your unsecured debt? Your creditor may contact you to obtain payment, report your default to a credit bureau, or take legal action against you.
Since your lender’s risk naturally increases with unsecured debt, you can imagine there is a catch. You’re right: Interest rates on unsecured debt are typically higher than those on secured debt and typically range between 5% and 36%.
What is revolving debt?
Revolving debt, sometimes referred to as a line of credit, means you can borrow money over and over again up to a dollar limit. You can think of credit card debt as the most common example of revolving debt. Other types of revolving debt include personal lines of credit and home equity lines of credit (HELOCs).
Here’s how revolving debt works: You make payments each month based on your outstanding balance for that particular month – you have to make at least the minimum payment. Interest charges may be added to the balance you carry forward from month to month. (Unless your credit card or line of credit gives you a 0% introductory interest period.) As you pay off what you owe, you free up more of your line. credit as you go.
You may also need to pay annual fees, set-up fees, or fees for missed or late payments when you sign up for revolving debt.
What is installment debt (non-revolving)?
Just to make sure we cover the reverse side of revolving debt (even if it overlaps with other types of debt), we’ll cover non-revolving debt as well. You cannot use a non-revolving loan more than once. Once you get the loan, you can’t get it anymore.
Non-revolving debt is also known as installment debt because you usually pay it off in regular monthly installments until a predetermined later date. Unlike revolving debt, you can’t “replenish” your line of credit every month.
Can you think of some examples of installment loans?
Mortgages, auto loans, student loans, and personal loans fall into exactly these categories. Note the tricky part of the puzzle: these types of loans can be classified into two categories: or secured loans! For example, you might consider student loan debt unsecured installment debt, but you would consider a mortgage in the “secured installment debt” category. On the other hand, you would put credit cards in the “unsecured revolving debt” category. Personal loans fall under the category of “unsecured installment debt”.
How to deal with these types of debt
You might be laughing because you know the answer to managing these types of debt – get rid of them by paying them off!
However, it might not seem that simple, especially if you have a lot of different types of debt. Which type should you approach first? For example, if you have a personal loan, a student loan, and a HELOC, which one should you put in your efforts to pay off first?
First, consider how much debt is backed by your own assets. What kind of collateral can you lose if you don’t make your payments on time?
Remember, if you fall behind on secured debt payments, you risk losing your home or car. Whatever you do, make sure you make all of your debt repayments, especially those secured by collateral!
Then you may want to pay more on other types of debt depending on:
- Your emotions and feelings about a specific debt
- The highest interest rate
- The amount of debt you have (the debt with the highest number)
Do you think the first point sounds a bit strange? Honestly, the way you approach your debt might not even make sense to anyone, even your financial advisor. However, if you have a real problem with your student debt, it may be a good idea to get rid of it first, even if it is not your highest interest rate or the amount of debt. the higher you have.
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7 health actions serving innovation in 2021
We all knew that traditional health care services were disrupted in 2020. The patient-doctor relationship has gone virtual. In the early months of the pandemic, many people in need of elective surgeries simply did not have this option available to them. And even local pharmacies have taken on a new role in e-commerce, as door-to-door pickup or door-to-door delivery of prescription drugs has become the norm.
So it’s no surprise that healthcare stocks were beaten last year. Overall, the sector was down 11%, well below the S&P 500 which climbed more than 15%.
However, the market is always looking to the future with a particular eye on innovation. The healthcare sector has many companies that are developing innovative approaches in areas such as gene editing. And other companies are in late trials for drugs that can deliver groundbreaking results for conditions that continue to plague our world.
This is the object of this presentation. We have identified 7 healthcare actions that offer innovative ideas that will help improve patient outcomes. And in some cases, it will completely revolutionize medicine. These are also the stocks that analysts are looking for.
See the “7 healthcare stocks for innovation in 2021”.