00:00Hi, I'm Priya Milani, the founder of StashVault.
00:02There's more to money than just how much you earn.
00:05But luckily, getting a handle on your money isn't rocket science,
00:08even though sometimes it can feel like it.
00:10One of the basics that's good to understand is debt.
00:12What is it, and what's the best way to handle it?
00:15So, what is debt?
00:18Debt is very common, and used properly, it might help you financially.
00:22But used improperly, not so much.
00:25Basically, debt just means that instead of using your own money to buy something,
00:28you use someone else's money.
00:30For example, if you use the bank's money to buy a home, you're in debt to the bank.
00:35If you use a credit card to buy something that you don't pay off at the end of the month,
00:38you're in debt to the credit card company.
00:40The most important thing to understand is that it's never too late to take control of your debt.
00:45Before making any moves, take a few minutes to understand what kind of debt you have.
00:49Then you'll be much more equipped to make more informed decisions with it.
00:53Another term that comes up when you're thinking about debt is interest rate.
00:57When you borrow money from someone else, you take away their ability to use that money.
01:01So when you pay them back, you have to pay them back a little bit extra to say,
01:04hey, thanks for letting me use your money.
01:07So one thing to keep in mind is that if you pay off your credit card in full each month,
01:10the interest rate actually doesn't even matter.
01:12Thinking of your credit card as free money, that's dangerous.
01:15But thinking of it as just a smarter way to use the money you already have, not so dangerous.
01:19Using your credit card, paying your balance in full,
01:22that's actually beneficial as it improves your credit score
01:25and basically just makes you look more trustworthy to the bank.
01:28So bottom line, think about why you're going into debt.
01:31Is it to obtain an education that could lead to a higher paying job?
01:34Or is it to buy stuff that you'd be better off saving up for and paying for in cash?
01:38If you want more insights into your financial health, check out the Turbo app.
01:42It's one of my top smart money picks for 2018.
