The Role of Cash In Debt

You may have heard the saying “Cash is King”. While this statement may hold a lot of power, it certainly isn’t the rule. In fact, there are situations in which cash isn’t always the best option.

Cash or Credit?

Debt is a growing problem in America and the average family holds over $10,000 in credit card debt. Having debt can be a good thing, but too much debt is never going to get you anywhere other than into financial trouble. People who hold a debt-to-income ratio over 50% should put away the credit cards and live on cash. Cash really is king when debt payments have begun to soak up over half of your monthly income.

Good debt, it does exit and it is a very necessary part of establishing and maintaining a good credit score. Credit after bankruptcy is important, and requires responsible use and diligent payments. Using all cash after a bankruptcy case won’t get you very far in rebuilding your credit reputation. Cash isn’t king when your debts are non-existent, but should still become part of your overall budget to prevent good debt from becoming overwhelming.

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