Avoid High-Interest Debt
High-interest debts, such as credit card debt, can quickly erode your financial health. Prioritize paying off these debts before making significant investments.
So, what’s “high interest“?
It depends on your situation, but generally, anything above 10% is considered risky. Credit cards, payday loans, and some personal loans often fall into this category.
Example of Avoid High-Interest Debt
You need a new phone. A store credit card offers 24% interest on a ₹50,000 phone. With minimum payments, you’d end up paying over ₹90,000! Instead, save up or consider a low-interest loan (around 5%) with fixed monthly payments.
Pros and Cons of Avoid High-Interest Debt
Pros |
Cons |
---|---|
You pay less interest, freeing up more cash for other things. |
You might have to wait for bigger purchases or experiences. |
Less debt means less stress and financial worry. |
High-interest debt might be unavoidable for emergencies. Prioritize paying it off quickly then. |
Good borrowing habits boost your credit score for better loan rates later. |
Low-limit credit cards can help build credit history, but use them responsibly! |
Lower debt allows you to handle unexpected expenses without panicking. |
It’s easy to overspend with readily available credit. Stick to your budget! |
You can save more towards dreams like a house or retirement. |
Consider risks before choosing savings over credit buys and missing investment opportunities. |
Top 10 Financial Rules for 2024
Financial wisdom tends to be timeless, with certain principles and rules enduring through changing economic landscapes and market conditions. As we look towards 2024, the following famous financial rules and principles are expected to remain highly relevant for individuals seeking to manage their finances wisely, invest effectively, and plan for the future,
Table of Content
- 1. The 50/30/20 Rule for Budgeting
- 2. The Emergency Fund Rule
- 3. The Rule of 72
- 4. Pay Yourself First
- 5. Diversify Your Investments
- 6. The 4% Withdrawal Rule
- 7. Avoid High-Interest Debt
- 8. The 20/4/10 Rule for Buying a Car
- 9. The Maximize Retirement Contributions Rule
- 10. The Home Affordability Rule