Learn the credit risk and benefit zones.
Having the ability to borrow money when you need it gives you flexibility. But borrowing too much money and being unable to pay it back is a serious problem in our country. In fact, the fastest growing group declaring bankruptcy is age twenty to twenty-four. It’s important to use credit responsibly and avoid having too much debt. If you understand how credit works and use it wisely, it can help you to reach your goals.
The benefits of having credit are:
The risks of having credit are:
How much debt can you repay?
General guideline #1:
Never borrow more than 20% of your yearly net income.
General guideline #2:
Keep your credit card debt low enough so that your required payments are no more than 10% of your monthly income.
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