In this week’s "Your Money Matters" column, investment professional Brenesha Cox-Lightbourne advises residents to exercise extreme caution when taking on personal debt. She emphasizes that while borrowing can be a useful tool for long-term investments like property or education, high-interest loans and credit card usage often carry hidden costs that can impact household finances for years.
Cox-Lightbourne distinguishes between "good debt," which supports assets that hold or grow value, and "bad debt," often incurred through impulse purchases or high-interest payday loans. She highlights the deceptive nature of minimum credit card payments, noting that a $2,000 balance at 20 percent interest could take over five and a half years to clear, costing more than $1,300 in interest alone. She warns that lenders often utilize complex fine print, and urges borrowers to demand written repayment schedules and clarification on fees before signing any agreements.
To protect personal financial stability, the author recommends always paying credit card balances in full whenever possible and being entirely honest with lenders about income and expenses. She concludes that the most effective way to manage debt is to avoid borrowing funds that cannot be comfortably repaid, suggesting that residents should always ask one additional question before committing to any financial obligation.