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Consumer state of mind causes overwhelming debt in Texas

It is important for people to properly manage their personal finances. This means that consumers should control spending in order to avoid overwhelming debt. Many times financial experts talk about two different kinds of credit card debt: good debt and bad debt. According to financial experts, what makes a debt good or bad is what a consumer uses the debt for. Generally, an individual's state of mind is what leads him or her to accumulate good or bad debt in Texas and elsewhere.

Generally, financial experts believe that good debt is used to purchase a product or service that is necessary. Also, the debt is sustainable, which means that the consumer can afford to repay the debt in a timely manner. Many times this type of debt allows consumers to become more productive, which increases income earning potential. This makes repaying the debt less burdensome.

Debt is considered bad when it is not necessary and not affordable. Consumers usually incur this type of debt while purchasing products and services that are not really needed, such as clothes that are never worn or subscriptions to magazines that are never read. Many times this type of debt is not affordable due to high interest rates and exorbitant finance charges that the consumer cannot sustain.

Commonly, a consumer's state of mind when making a purchase with a credit card is how he or she ends up with bad debt. This occurs when the person is using the emotional part of the brain, rather than the logical faculties. Consumers in Texas should resist the urge to shop with their emotions to lower the risk of landing in financial trouble. However, if a person does end up with overwhelming debt problems, bankruptcy may be one option which could provide debt relief.

Source: Forbes, "Good Debt Bad Debt," Panos Mourdoukoutas, Nov. 24, 2012

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