The Debt Game - You Have to Know the Rules to Play Well

If you have entered or are entering the world of borrowing, the debt game, one of the best things you can do for yourself is to learn to play it well so that you can be the winner when the game is over and get out of debt safely. Here are the rules.

By Cornie Herring

When you borrow money, you enter the world of the debt game. Like many other games, it has rules, player strategies, and a scoring system. Many are losing in the debt game, with the worst outcome - in which bankruptcy filing is their ultimate option. If you have or are entering the world of the debt game, one of the best things you can do for yourself is to learn to play it well so that you can be the winner when the game is over and get out of debt safely.

The Rules of the Debt Game

In order to play well in the debt game, you need to know the rules. Here they are:

Rule #1: What you borrow, you pay back with interest

There is no 'free money' in the real world. Money lenders lend their money to you, and in return you need to pay it back to them with the amount you borrowed - plus the interest - based on the contracted interest rates. Once you have signed on the dotted line of the loan offer agreement, you have committed yourself to repay that loan plus the interest as stated in the agreement.

Rule #2: If you don't pay, you suffer

There are consequences when you don't repay your loan: unpleasant phone calls from creditors, urgent envelopes delivered to your door, and surprise visits from debt collectors hired by lenders come to take back what you bought but didn't pay for. In order to avoid this type of grief in your life, repay what you borrow.

Rule #3: If you pay your loan on time with interest, you are rewarded

Money lenders will like you if you pay your loan on time with interest. They think you are great and will want to lend you even more money with a lower interest rate. With your good repayment record, they know chances are good that you will pay them back.

Rule #4: Your performance in the game of debt earns you a score

One you have entered your first debt game by applying for your first loan or credit card, a score system will be created for you and follow you for the rest of your life. Three primary credit agencies in the United States keep sophisticated records of each individual's credit history, including yours. Based on your past credit activities, a credit score will be assigned to you.

If you never miss a loan repayment, and you always pay your loan on time each month, you will get a good credit score. If you have an excellent credit score, you will get better offers such as higher loan amounts, lower interest rates, and faster approval times when you apply for credit. You will ultimately have a better position to negotiate for an even better offer, because many lenders want you to become their client and they willing to lower their requirements and provide you with a better offer in order to get you signed up with them.

In Summary

We all play the debt game, because there are times we must borrow to meet challenges and take advantages of opportunities. The important thing to remember is that as long as you know the rules and play the game well, you will come out ahead.