This really sounds like the ultimate oxymoron, but one of the best ways to get out of debt is to go a little bit further in. What’s that? First, to help this make more sense, let’s clarify – if you need to get out of bad debt, going into good debt will help you pay off those credit cards and make more money. It’s important to understand that there is a huge difference between good debt and bad debt. Going into good debt has some risks, but when managed correctly, you can end up making enough money to quit your job, pay off your bills and save for retirement.

Let’s take a look at one example of how going into good debt can get you out of bad debt. For this example, let’s say that we have a person who has $10,000 in credit card debt. They’re overextended with too many cards and paying way too much interest. It’s getting harder and harder to make those monthly minimum payments and it seems as though it will take decades to get out of this mess.

Instead of declaring bankruptcy and just giving up, let’s say that this person goes and gets a loan for $2000. Since their credit is still pretty much intact, this isn’t an issue. They take than $2000 and invest it into ten shares of a stock that sold for $200 a piece. Within the first month, the price of that stock triples. They now have $6000 and it’s only been one month. They take $2000 out of that amount to pay off the loan, and are left with $4000.

Over the next month, the stock once again goes up. That $4000 is now $8000. The person cashes out the stock, pays down their credit cards and is left with a manageable $2000 in debt. Why not pay it all off? The secret to great credit is leaving some debt that you continue to make payments on – this builds up your credit score. In two months, the person was able to go from $10000 in debt to paying off all but a small portion of it.

Compare that to getting a consolidation loan. In two months, the person would not have made a dent in what they owed. If the stock market isn’t your thing however, there are many other ways that you can use good debt as leverage to create multiple streams of income. Whether you deposit it in a high interest bank, buy a CD or purchase a rental property, a leveraged loan can help you get out of debt much faster than a consolidation loan.

The key is picking the right opportunities and managing your money. Once you’ve paid down your bad debt, keep using good debt to create more income streams. This is the secret that thousands of millionaires use every year to keep bringing in tons of cash and it will work the same for you.

Photo Credits: 1

Originally posted 2008-11-24 07:44:19. Republished by Blog Post Promoter

Related Posts

• 3 Ways to Consolidate Credit Card Debt Today's post is a guest blog by Nicole James of Debt Consolidation Care. If you are overburdened with multiple credit card bills and want a solution, then credit card debt consolidation could be the answer that you are looking for. This process combines all your multiple credit card bills into......
• 4 Tips to Getting Bad Debt Under Control If you are swimming in a sea of bad debt, keeping your head above water can be incredibly difficult. Thanks to our consumer culture, the availability of credit cards and a general lack of concern for what debt means, many people find that their bad debt is out of control.......
• Debt Consolidation Credit cards are financial devices which their users end up digging themselves too deep with. Pay it later is too easy with a credit card. Too many users will buy stuff that is outside of their means and as such will get into trouble. Compound this with numerous cards, and......
• Paying off Debt in 9 Steps pt 3 Part three in the series on paying off debt: There is a solution to your problems with debt. These 9 steps will have you paying debt off in no time. 6 - Hunt down a good home equity loan. If you own your very own home and you have accumulated......
• The Dos and Donts of Credit Scores Pt 1 A credit score is a really important indicator on how likely you will be to default on a credit card or a loan. Your credit score is determined by a number of different factors, including your payment history, the amounts of money that you owe, the length of credit history,......

Related Websites

• How to Find Money Paper for Sale There are many different kinds of hobbies out there that you can enjoy, but if you enjoy collecting paper money, you are likely always on the lookout for a great item that you can add to your collection. These great pieces can include money from around the world as well......
• Learning How to Deal with a Coin Collector: 4 Tips to Success The world of coin collection is interesting and full of connections, with each coin collector working with other coin dealers to get the piece that they want. Those who are interested in serious coin collecting need to be well versed in the art of the sale, understanding what they should......
• Collecting Money World Wide There are several money collectors here in the United States and around the globe. There are even some people who make special trips to other parts of the world just for the purpose of collecting currencies for their personal collections. Many people go to some of the events and trade......
• Buying a Fixer Upper with an FHA 203k Loan Most people are familiar with using an FHA loan to buy a home. If your home and income qualify, it can be one of the most competitive financing products out there. However, what if you find a beautiful piece of coal that just needs some polishing to become a diamond?......
• A Beginner Guide to Collecting Paper Money While there are plenty of resources that exist for those who are interested in collecting coins, there is little out there for those collecting paper money. Paper money collections are far more intricate than coin collections, offering more difficult finds and more interesting pieces. There are a couple of facets......

Online Stores

• Secret Wars Superhero Modern Age (1980-Now) Comics Collectibles
• Individual Cards Yu-Gi-Oh Animation Trading Cards Collectibles
• Victorias Secret Lip Gloss Makeup Store
• College Football Cards College Trading Cards Cards Sports Collectibles
• Victorias Secret Eye Shadow Makeup Store

If you liked this article, vote for it on del.icio.us and stumbleupon.


Categories:

Bankruptcy, credit score, Debt, Personal Finance, Stocks

Tags:

bad debt, cashes, consolidation loan, credit card debt, credit cards, credit score, decades, declaring bankruptcy, enough money, little bit, minimum payments, money to quit your job, oxymoron, retirement, small portion, stock market, ways to get out of debt