Refinancing or consolidating debt into a lower-interest loan may also help if it reduces your monthly interest payments. Another option is working with a financial advisor who can help you create a realistic monthly budget and repayment plan. They can also assist in evaluating and prioritizing your debts while developing a long-term financial strategy. You can also apply for a balance transfer credit card and transfer balances from other cards to it. Many credit cards come with an introductory 0% APR for up to 18 months.

Traders borrow stocks to sell them at a higher price, aiming to buy them back at a lower price later, thus making a profit. The use of margin accounts is also highlighted, allowing investors to trade with borrowed funds, amplifying both gains and losses. In addition, bad debt can affect a company’s creditworthiness, making it more difficult to obtain financing or loans in the future. It can 5 ways debt can make you money reduce an individual’s credit score, making it more difficult to obtain credit cards, loans, and other forms of financing. It can also lead to increased stress and anxiety, which can have a negative effect on an individual’s health and well-being. In summary, the wealthy utilize real estate equity through strategic refinancing.

Credit Cards as Strategic Tools

When you’re reviewing your spending and creating a budget, ask yourself whether there are ways to reduce your expenses. When you cut costs, you can reallocate those funds and accelerate your debt payoff journey. Leave your credit card at home and try to pay for your purchases with a debit card or cash. As you pay down your credit card balance, your credit utilization ratio will improve, which, in turn, can raise your credit score.

Pricing Terms

High net worth individuals can also live off lines of credits backed by their assets and only pay off their loans from sources with optimal taxing structures. Another savvy move is to refinance at lower rates and use the proceeds to pay off debts charging higher interest. This may include credit cards, auto loans, or other real estate mortgages with less favorable terms.

• The end of the year gives you a chance to adjust contributions and coverage for a range of benefits,  including insurance coverage, voluntary benefits, and savings accounts.
• If you’re looking for ways to bump up your savings, Oportun has an app that analyzes your spending and auto-saves money to meet your savings goal.
• It can reduce an individual’s credit score, making it more difficult to obtain credit cards, loans, and other forms of financing.
• For example, if you owe $4,000 on a card, Chen says the AI agent could get the debt lowered to around $2,400 that you pay off over a period of time in installments.
• To understand how brokerage and investment advisory services and fees differ, the Client Relationship Summary and Regulation Best Interest Disclosure are available for you to review.
• This gives them the flexibility to capitalize on investments quickly when the right opportunity comes along.

I’ve set goals to attain financial freedom and I continue to work toward the mark. If you’re serious about learning how to use debt to grow your wealth, consider partnering with business experts who can guide you through the process. These professionals can provide valuable insights and resources to help you achieve your financial goals. However, good debt should be managed responsibly and individuals should be mindful of the amount of debt they take on, the terms of their loan, and the interest they will pay.

The first and most important step when you want to get out of debt is to add up your debt total. Take out a sheet of paper or open a spreadsheet and write down your creditor’s name, the amount you owe them, your interest rate, and your monthly payment. Using online tools and resources can give you a head start in your repayment. Use an online debt payoff calculator to calculate how much you’ll need to pay each month to get out of debt quickly. Use that extra cash and any windfall you receive, such as bonuses and tax refunds, to make a lump-sum payment on your debt.

From just $107.88 $24.99 for Kiplinger Personal Finance

Consolidating your credit card debt may be a good idea if the new debt has a lower APR than your credit cards. If you’re pursuing a degree or certification in a high-demand, high-income field — technology, health care, finance or the skilled trades — debt can be a smart move. Fields with strong job placement rates and a reasonable cost-to-earnings ratio are especially worth the investment.

Margin Investing

This strategic management allows the wealthy not just to maintain their businesses, but to grow them exponentially. It is a balancing act between leveraging the debt to grow the business and ensuring that the debt remains at a manageable level. The rich often have excellent credit, allowing them access to ample revolving credit lines with low-interest rates. While the average person sees credit cards as debt to avoid, the wealthy utilize this readily available cash flow to seize opportunities. But they do charge interest and have relatively short repayment terms, meaning your investment would have to earn at least enough to cancel out the interest you’d accrue quickly. When evaluating businesses, investors consider a company’s financial leverage and operating leverage.

How can I consolidate credit card debt without hurting my credit?

Credit cards also provide conveniences like purchase protection, extended warranties, and dispute resolution services. The wealthy utilize these perks to minimize risks on large purchases. In addition, the rich take advantage of rewards like airline miles, hotel points, and cash back offers to get the most value from their credit card spending.

• “I was just fascinated by the fact that my American classmates all had credit cards, and I’d never seen that in the country where I grew up,” Chen says.
• If margin is used to increase the size of your trades then your results are amplified.
• If you have any skills, use those to start freelancing on the weekends to earn extra cash.
• There’s a lot of chatter about chatbots and “AI-powered” apps right now.
• Income generation through the use of debt involves borrowing money and using it to generate income through investments or other business ventures.

This gives them the flexibility to capitalize on investments quickly when the right opportunity comes along. Loan sales are structured as either assignments or participations, with investors usually trading through dealer desks at the large underwriting banks. Dealer-to-dealer trading is almost always conducted through a “street” broker.

Conversely, currency trading has the potential to clean out a trader’s account in a matter of minutes. Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. To maintain our free service for consumers, LendEDU sometimes receives compensation when readers click to, apply for, or purchase products featured on the site. Compensation may impact where & how companies appear on the site. Additionally, our editors do not always review every single company in every industry.

Having good credit isn’t just a flex — it’s a sign of financial stability. It’s tempting to use debt for a flashy car, a kitchen remodel or that two-week dream vacation to the Maldives. While some purchases might feel like upgrades, they rarely pay you back. As a parent, you want to ensure your child has all the opportunities they need to be successful in life. Still, the increase in the costs of higher education drives more students towards taking out loans, which ties down a young adult before they start a proper career.

Most people are aware of this through their own experiences in the workforce, which is why the global student loan sector is currently undergoing a growth phase. For most people, homeownership is the biggest financial decision they’ll ever make. In the first quarter of 2025, the American homeownership rate was 65.1%, a decrease from 65.7% at the end of 2024. This means that fewer people, especially first-time buyers and younger adults, can afford to own the house in which they live. With American household debt at $18 trillion at the end of 2024, it’s easy to understand why. By my late 30s, I started to see that I was gaining a little upward mobility.