Healthy Habits Make Happy People<\/h2>\n
How can you make wise choices about your student loans and credit card debt? First, you need to form healthy habits based on these three cornerstones of financial health:<\/p>\n
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- Be responsible<\/strong>. Firmly establish a list of needs versus wants. Do you need a car to get to work? Most likely, yes. Does it need to be a Cadillac or Audi? Probably not.<\/li>\n<\/ul>\n
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- Make a budget and stick to it<\/strong>. This helps you stay consistent and monitor your income and expenses. Knowing your limits is vital for sustained financial health.<\/li>\n<\/ul>\n
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- Learn what you can<\/strong>. You wouldn\u2019t fly a jet without pilot training, so you shouldn\u2019t take someone else\u2019s money without learning about the process. You don\u2019t need to be a certified financial advisor, but you should thoroughly review loan terms and conditions.<\/li>\n<\/ul>\n
![\"debt\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/11\/debt.jpg\" "\\"\\"")
<\/p>\nGood Debt Vs. Bad Debt<\/h2>\n
In an ideal world, we wouldn\u2019t borrow — or have to borrow — money for what we need. Reality isn\u2019t quite as simple. Most Americans don\u2019t have the luxury to live on cash alone. We have to prioritize our debts<\/a>. Typically, we use two categories: good debt and bad debt.<\/p>\n
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- Good debt <\/strong>is any borrowed money that is an investment in the future. Examples of good debt include student loans for a college education, a mortgage, or a small business loan.<\/li>\n<\/ul>\n
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- Bad debt<\/strong> is any borrowed money used for depreciating assets. In other words, if you borrow money for goods or services that lose value, you will accrue bad debt. Examples include cars, clothes or consumable goods, and credit cards.<\/li>\n<\/ul>\n
Related:<\/strong> How I Went From $100,000 in Debt With No Job to Debt-Free in 5 Years<\/a><\/em><\/p>\n
Even though we refer to it as “good debt,” you still want to make sure to follow the three healthy habits.<\/p>\n
3 Common Questions About Student Loans and Credit Cards<\/h2>\n
Navigating terms and conditions of various loans is like crossing the Sahara barefoot. Naturally, borrowers have many questions. Here are answers to three of the most common questions about student loans and credit card debt.<\/p>\n
Should I pay off my credit card debt with my student loans?<\/h3>\n
The short answer: probably not. First, understand the difference between paying off debt and transferring it. You may get a lower interest rate by borrowing a student loan to pay off a credit card balance. However, it just transfers the debt somewhere else. It doesn\u2019t actually relieve the burden.<\/p>\n
Second, it is likely in violation of student loan policies. Even if it isn\u2019t expressly illegal, it borders on the unethical. It\u2019s wise to steer clear of this debt management strategy.<\/p>\n
Should I make my monthly student loan payment with a credit card?<\/h3>\n
Paying student loans with credit cards is a resounding no. Risks are higher, and consequences are more stringent for using plastic to pay off your education loans<\/a>.<\/p>\n
You run the risk of lawsuits, trouble discharging the debt in cases of bankruptcy, and much higher, variable interest rates with credit card debt. There are far better and more financially beneficial repayment options for student loans<\/a>.<\/p>\n
Should I get a credit card if I have student loans?<\/h3>\n
Truthfully, it depends. Many pros and cons<\/a> complicate this decision. If you are an undisciplined spender or worry about timely payments, you probably want to avoid methods for accruing new debt. If you are interested in establishing a credit history and are financially responsible, it may work in your favor.<\/p>\n
The system doesn\u2019t exist to intentionally take advantage of consumers, but loose restrictions and unexpected expenses can quickly damage your credit. No debt management or financial planning strategy is complete without a healthy dose of personal responsibility.<\/p>\n
![\"cover-expenses-real-estate\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/11\/cover-expenses-real-estate.jpg\" "\\"\\"")
<\/p>\n3 Tips for Managing Your Debts<\/h2>\n
Frequently, we have a combination of debts, including student loans and credit cards. Here are three tips to manage them effectively:<\/p>\n
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- Make timely payments.<\/li>\n
- Pay more than the minimum balance.<\/li>\n
- Consolidate debts if and where possible.<\/li>\n<\/ol>\n
Related:<\/strong> How to Get Out of Debt: 5 Steps Toward Healthier Money Habits<\/a><\/em><\/p>\n
Finding the Balance<\/h2>\n
- Bad debt<\/strong> is any borrowed money used for depreciating assets. In other words, if you borrow money for goods or services that lose value, you will accrue bad debt. Examples include cars, clothes or consumable goods, and credit cards.<\/li>\n<\/ul>\n
- Good debt <\/strong>is any borrowed money that is an investment in the future. Examples of good debt include student loans for a college education, a mortgage, or a small business loan.<\/li>\n<\/ul>\n
- Learn what you can<\/strong>. You wouldn\u2019t fly a jet without pilot training, so you shouldn\u2019t take someone else\u2019s money without learning about the process. You don\u2019t need to be a certified financial advisor, but you should thoroughly review loan terms and conditions.<\/li>\n<\/ul>\n
- Make a budget and stick to it<\/strong>. This helps you stay consistent and monitor your income and expenses. Knowing your limits is vital for sustained financial health.<\/li>\n<\/ul>\n