Article: Individuals often have a tendency to lump all debt together, when in reality debt differs significantly in cost, value, and risk. Knowing these differences helps you recognize which debt to tackle first. The difference between secured, and unsecured debt is the first distinction to understand. Secured debt, also known as "asset-backed debt", refers to debt that requires some sort of collateral to obtain the loan. These loans are seen as lower risk by a lender since if you default on your loan, the lender can require the collateral to be sold to pay off the amount owing. It is for this reason that secured debt often has lower interest rates than other forms of debt. Examples of secured debt include home mortgages, home equity lines of credit, auto loans, or credit cards with a secure line of credit. Unsecured debt refers to receiving a loan with no collateral. These typically have higher interest rates and include credit cards, lines of credit, student loans, or payday loans. These types of debt are often more costly. Generally speaking, secured debt is preferable to unsecured debt since it is backed up by an asset like a home or a car. Debt repayment should prioritize eliminating unsecured debt this debt is more costly, cannot be quickly repaid in the event of a crisis by selling an asset, and does not contribute to owning a potentially wealth-building asset (like a home). Unsecured debts are generally higher interest than secured debts, but there are cost differences within each category of debt to be aware of. Understanding which debt is most expensive helps target which to focus on paying. Credit card debt: This is commonly the most expensive form of debt. Average rates are 15% for fixed-rate debt and 17% for variable rate debt, although costs can be much higher depending on credit rating and history. Unsecured credit cards generally have higher interest than secured cards. Personal loans: These are typically the next most costly but rates vary dramatically depending on credit rating. A personal loan simply refers to any amount that can be borrowed for almost any purpose from starting a business, to funding a vacation, to paying off other types of debt. Rates for these types of loans typically vary between 5 and 11%. Personal loans are typically unsecured debt. Student loans: Student loans typically vary between 4 and 8% (although private loans can be more costly). Federal loans are typically cheaper. Despite being relatively cheap, unsecured debt federal student loans have strict rules of repayment. Private loans are in part more expensive to cover the increased risk to the lender since they are unsecured debt. Mortgages: Mortgages are typically one of the least costly forms of debt, and they have the added benefit of being a secured debt backed by a significant asset that (hopefully) increases in value over time. Mortgage interest rates vary tremendously based on credit score, whether the mortgage is fixed or variable, but typically rates are between 3 and 5%. Auto loans: Auto loans vary in cost dramatically and can be exceptionally high. While the average is between 4 and 6% for a fixed rate loan, purchasing from a "buy here/pay here" dealer can lead to rates well into the double digits. Although auto loans are secured, the vehicle used as collateral is a depreciating asset and the increased risk to the lender results in higher interest rates. Payday Loans: These are short-term loans that are meant to be repaid by part of a future paycheck. If you want to borrow $100, the lender will give you that amount, minus a fee (or with a fee tacked on to the amount you must repay). You are then expected to repay the amount from your next payday, otherwise you incur further (and possibly) fees as the loan "rolls over." Interest rates can be in excess of 50% and even up to several hundred percent. These are extremely expensive loans and should be avoided if possible. While there are other types of debt, the important thing is to be aware of the interest rates, balance, and secured or unsecured nature of each loan you have. Some financial advisers like to differentiate between "good debt" or "better debt," and "bad debt".. Knowing the distinction between the two types is important, as it allows you to focus your resources on eliminating, and living without bad debt. Good or better debt refers to any debt that creates value, or debts that produce more wealth over the long-term. Mortgages, school loans, business loans, or real estate loans can be seen as good debt. In each case, these loans are investments, and can (ideally) generate more wealth for you over time. These forms of debt can be approached with less caution, but still can cause issues if they don't generate the expected wealth. They are typically lower cost, and secured (with the exception of student loans). Bad debt refers to any debt that does not create value over time. For example, this could include any debt that is used to purchase disposable items, or items that deteriorate in value quickly over time. Examples of bad debt include, credit cards, store cards, auto loans, or payday loans. Bad debt involves money spent for consumption, rather than investment.
Question: What is a summary of what this article is about?
Distinguish between secured and unsecured debt. Learn the cost differences between types of debt. Recognize that not all debt is to be valued equally.
Article: Breaking off a relationship when it's not working isn't something you should feel guilty aboutin fact, it's a form of self-care. You're also showing the other person compassion. Odds are, they're aware of the same issues that you are but they just can't bring themselves to do it. Give your ex at least a few months to process the breakup before reaching out. This means getting them off of your mind by cutting off communication through social media, texting, calling, or face-to-face interactions. Time apart from each other is necessary and, in the long run, beneficial for both you and your ex. This may also mean deleting their number from your phone, unfollowing and unfriending them, and deleting photos of the two of you. If you're worried about seeming cruel or cold, let the person know that this is something you'll need following the breakup. Even if you're the one initiating the breakup, it'll probably be painful for you, too. Remember to give yourself time to grieve and adjust to the change. Focus on self-care activities and doing things that you enjoy, such as spending time with friends and family, being in nature, exercising, taking bubble baths, and reading. Don't turn to alcohol or drugs to make yourself feel better. In the end, these things can actually make the healing process more difficult.
Question: What is a summary of what this article is about?
Don't feel guilty about breaking up. Don't contact your ex for a few months after you break up. Take care of yourself and let yourself heal.