Debt. It’s a small word, but it’s a big topic in the world of finance. It’s been around since the barter system, and it will always be around as long as goods exist. It can affect people of all ages and backgrounds for varying amounts of time. At some point in your life, you will have to deal with debt. It kinda sounds like “death,” and sometimes it might seem like it has a stranglehold on your wallet, but debt is an issue that can be resolved, as long as you stay informed.
What exactly is debt? Simply put, it is “something owed.” The word comes from the Middle English “dette,” which is derived from the Latin “debere.” In the creation of a debt, there are two parties. One, the creditor, supplies the money. The other, the debtor, receives the money and agrees to pay back the creditor. The creditor and debtor agree on a standard of deferred payment, or the way the debt will be repaid. Substance, time, and extras are important factors in paying back a debt. Whether it be money or cookies, whether it be paid back in one month or ten years, and whether or not interest is tacked on to the owed amount, debt is debt and it must be paid back.
The most common type of debt is a loan. In this case, a person borrows an amount of money from another person or entity. Loans are given for numerous reasons, such as mortgage for a home, money to attend college, or using a credit card for purchasing goods, among others. The loan is eventually paid back to the creditor in one full payment or in increments over a certain period of time. If the loan is not paid back in time, penalties could be applied, such as a larger amount of money owed or even seizure of property for compensation.
When paying back debt, the debtor must be aware of many different pieces of information. How much money is owed? When is it due? To who is it owed? Is it a one-time payment or is the full amount due in increments over a period of time? Is there any interest along with the debt? The debtor must also ask him/herself a number of questions. For what purpose is the debt in existence? Is it better to pay the full amount or in increments? What do I do if I can’t make the payment on time? In order to deal with debt, you must be aware. Know what you need to pay, but also know that everyone deals with debt at some point in their lives. Retain a calm, focused mind and you can tackle any problem, including debt.
He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.
Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.
In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
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