Introduction to Debt Management

What is Debt?

Simply put, debt is money owed later in exchange for a sum or service now (Britannica, 2021). As global societal norms change, so do our financial habits, and inevitably, debt has become a main focal point in our image of financial success. In your life there may be times where you need to interact with debt for one reason or another, and the way you proceed will likely change with the context of the situation. That makes understanding how to manage debt a very valuable skill because, in some instances, how you approach debt management can drastically change how you handle your finances.

Why is Debt Management Important?

Debt can be a worrying or confusing topic, but It's not always as bad a thing as you might think. If you take a second to visualize some common life goals, many of them may end up being associated with some debt. In the early stages of your finances, you may not have an overabundance of money lying around to make major purchases like a dream house or a sports car outright, and saving up may take too long to be realistic. What's more common is taking out a loan for these things, but this means you'll be in debt until you pay the loan off. That's where debt management comes in because when done correctly, you can find the middle ground between living affordably and having the things you want and need. In this module, we'll provide some information to help you find that middle ground.