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5 ways you can change your approach to debt

The word ‘debt’ has all sorts of connotations in contemporary America. In previous decades, debt was viewed as a wholly negative idea and some of this legacy unfortunately still remains.

Yet debt can be a way of negotiating life and if handled in the right way, can actually have many positive aspects. It can allow you experiences that may otherwise be unavailable to you.

There are different types of debt and many ways to deal with it in a responsible way, such as regular repayment to creditors and taking advantage of balance transfers when applicable.

Here are five key ways of changing your approach to debt that will help you understand debt and feel more empowered in decision making around money, loans, balance transfers and debt in general.

1. Appreciate the difference between positive and negative debt. Positive debt tends to be associated with long-term goals or commitments that will enhance your life or provide security.

Negative debt, on the other hand, tends to be associated with items for short-term pleasure and instant gratification that will affect your life for just a short period.

2. Realize that almost everyone in the United States has some level of debt and so you are in good company. Unless you are from a wealthy background, you will need to borrow money at some point in your life.

You may be surprised at some of the people you know who also have debts. Remember, even daily living can be expensive and most people need a helping hand with finance.

3. Two of the main reasons for borrowing money include paying for a house and for your education. These are long-term investments that will add value to your life, so the debt is a positive one.

Think about the purpose of the money you are borrowing. Having a College degree is almost essential when it comes to getting a well-paid job, so incurring debt for this reason is very different to simply using it for frivolous purposes.

4. Research different finance options when purchasing a car. Choose a reliable, but not necessarily top-of-the-range, model so that you can manage repayments without any problems.

Keep organized records of your finances and repay each statement on time. If you use credit cards, take advantage of lower or 0% interest rates on balance transfers.

5. Remember that actually having debt can work in your favor when applying for a mortgage or other type of financial product. Managing debt can show you are a reliable consumer and this will make it easier for you to get credit.

Most people are surprised that they can be turned down for credit on the basis that they have never borrowed money. Being able to show a record of responsible borrowing can give you access to better financial products.

Changing your approach to debt can allow you to access opportunities that otherwise will pass you by. An education or a home is hard to fund without financial help.

Stick to the golden rule of borrowing for long-term benefits rather than simply to pay for the latest trendy gadgets. Make regular repayments, keep records and allow positive debt to help you achieve your goals.

Financial planning tips for working aborad this summer

Many students opt to take jobs abroad for the summer holidays, or their gap year after college. It’s a great way to earn money, broaden horizons, have fun and experience a new culture.

At the same time, however, working abroad in a foreign country for the first time, managing a new culture and keeping a reign on your finances can be difficult.

Common problems include failing to budget, failing to accurately translate prices into UK pounds mentally when purchasing items, relying on expensive balance transfers rather than setting up an international bank account and withdrawing regular small sums from a UK account from foreign cash points.

It can be tempting to keep a UK bank or checking account when heading abroad, but your new employer will pay you in the local currency and regular small amount exchanges will attract costly fees. Of course, if your are an insurance agent in Charlotte, an overseas checking account may not be of much use.

Furthermore, carrying out regular transfers from UK pounds to local currency will erode your valuable earnings through fees and commissions.

This is particularly prevalent when using cash points, debit cards at certain outlets, or changing money at exchange bureau with high rates of commission.

So firstly, sort out a local currency account with a local bank in your country of summer employment. You’ll need your passport, residential identification and proof of employment.

Arrange to have your wages paid into this account, get your head around the exchange rate and begin operating and managing your summer in the local currency.

Secondly, make sure you have adequate insurance set up before you go abroad. If you get sick or hurt at work, how will you be covered? Have your paperwork in a safe place, with photocopies and key details backed up elsewhere just in case.

Thirdly, avoid using your mobile phone to call home. Get a local SIM card to your summer home or an international calling card, which will make significant cost savings on your calls. Similarly, look for free WiFi areas, use internet cafes or get local data SIMs before using a UK laptop or mobile abroad for the internet.

Get used to cooking the local food and experiment. Ask for recommendations and find the local supermarket as eating out will rapidly eat into your wages!

Find ways to socialise without spending a fortune. If your objective is to save money beyond your summer stay, this is especially important, as it’s easy to drink away your wages.

Join a football team, or an evening running group. Go on Twitter or Meet Up and find interest groups in the area. Speak to colleagues for ideas, especially if community is a strong theme. Meet new people in the town squares, at Sunday sports events, at house parties and dinners. Just avoid expensive bars every night.

Also, try to learn the local language – until then you will really be a stranger in your host country. At least show willing to picking up a few phrases here and there to dispel the myth that foreigners don’t make the effort.

Finally, enjoy the experience! Get your daily finances in place – and ideally book a return ticket home while funds are high – and then make the most of your summer working holiday. Meet new people, get on a bike and see new sights, experience new tastes, sounds, scents – and come home all the better for the broadening experience.