Knowing the difference between good and bad debt can have a major impact on a person’s financial health. So writes Ben Steverman of Bloomber.com (Excerpted in The Week, August 14, 2015, pg. 33) Bad debt is credit card debt which imposes a higher interest rate than other types of loans. When I see a person buying a coke with a credit card, I wonder if he or she is keeping track of these tiny expenditures, or if that person will be surprised at the end of the month by a $50 bill for a drink that’s bad for one’s health. Worse, any interest due on the balance isn’t tax deductible.
Some debt does make sense, however, even when it lowers your credit score. (“What the Experts say,” The Week, August 14, 2015 pg. 33) Taking out a loan to start a business is one example. Paying for an education or training for a new career, is another. Buying a home increases your assets and offers a tax deduction. Paying for a debt counselor may affect your credit rating, but if counseling allows you to manage your debt and returns you to financial health, Steverman feels it’s worth it.
So many issues surrounding money management aren’t obvious, otherwise most of us would have larger bank accounts. Even governments can be fooled. Vermont hired experts to pencil out costs for its single-payer health system. 4 years later, the program is in sticker shock. To save it, “the state impose[d] an 11.5 percent payroll tax and a state income tax with a top rate of 9.5 percent. (“Sanders’ progressive paradise,” by Geoffrey Norman, excerpted from The Wall Street Journal, The Week, August 14, 2015, pg. 12)
Of course, to err is human and deception is often the remedy applied to disguise mistakes. We know this to be true among bankers, but even celebrities aren’t exempt. Top model, Gisele Bundchen, has spent years touting her natural beauty and vowing she’d never resort to plastic surgery. When she changed her mind, she arrived at a Paris clinic dressed head to toe in a Burka. (See related topic: Blog 7/13/15) But she didn’t outwit the paparazzi. What gave her away were her open toe sandals. No devout Muslim woman would expose skin. (The Week, August 14, 2015 pg. 10) What’s that got to do with money? Well, her little hypocrisy is going to cost.
(Originally posted 10/2/2015)