Is there good debt and bad debt? What’s the difference? Is it good or bad to have debt? It can be a slippery slope, so understand the psychology of debt before making big decisions to finance your lifestyle.
In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about debt. Buying things you can’t afford with money you don’t have just to impress people that you don’t know or like can be a big problem.
- Reasons why people finance things:
- Leverage low interest rates
- Increase efficiency and invest in other things
- Buy something sooner for immediate gratification
- Cultural challenge to do what everybody else does
- More or Less: In reality, does having debt or paying it off make you happy?
- Psychology of Debt: Save up before being susceptible to spending more
- Key Takeaways:
- Pay attention to debt-to-income ratio
- Bring debt number/amount down
- Save wisely to avoid being house poor or filing bankruptcy