The Two Kinds of Debt
It's important to recognize Managed Debt and Unmanaged Debt to make better decisions with our spending.
Managed Debt
In a capitalistic society, 'Managed Debt' is generally a good thing, as it leverages the power of an individual's income to make large purchases or inject sizeable amount of working capital into business. 'Managed Debt' is a debt that is deemed necessary or useful to an individual or business. In this scenario the repayment terms of the debt is comfortably within that individual or business means to repay. Another aspect of ''Managed Debt' is that it still leaves rooms for individual or business to set aside some income aside for rainy days.
Unmanaged Debt
'Uncontrolled' and 'Unmanaged Debt' on the contrary is often beyond the ability for one to repay. Any debt that is not necessary or that is avoidable is uncontrolled. It saps the individual or business income or revenue even before you earn. In this situation the individual or business feels they're working solely to repay loan and credit card obligation, often with no end in sight. In many instances the borrower finds her/himself forced to take on even more debt in order to meet her/his current repayment obligation. Unplanned and unforeseen financial like prolonged illness or a major emergency repair can drive the borrower to financial crisis. Uncontrolled and Unmanaged Debt therefore, often places the borrower just steps away from bankruptcy.