Disarming Debt

Different Kinds of Debt

Debt is about buying money.
Buying money increases the cost of what you buy.

Of course money is not the measure of everything.
But financial return can be the largest limiting factor.

There are two basic kinds of debt

As a special class of "Bad" debt, credit cards are acceptable only if you pay them off within the interest free period.

There are two types of investment debt.

For quick and dirty calculation as to whether it is worth borrowing to cover a purchase, try this calculator.

This calculator assumes lots of simplifications, for example, that the borrowed sum is paid off linearly.
It is only intended as a rough, initial guide.

How much does it cost?
How much can you contribute?
You have to borrow
Interest Rate
%
Over
Years
How long will you keep it
Years
Interest Paid
How much will you earn from your investment?
per Year
How much do you save by having your investment?
per Year
Average Repayment per Year Total Yearly Income per Year
Yearly balance
If you resell, how much will you get?
Total Cost Total Income
Profit

Of course, if the profit is negative, then it doesn't make much sense.

If it is possible, when you take out a loan, make sure that you can get out of it without having to pay a penalty. You never know, if you win the lottery you might want to pay off all your debts, and it would be a shame if this cost you more money than holding on to them...