Business Word for the day: Debt

A debt is any money that an individual owes or a state of owing someone.

Debt could be a feeling of gratitude towards someone for an act done for you.

Debt is something, usually money borrowed by one party from another. It is used by many corporations and individuals to make large purchases that they could not afford under normal circumstances.

In Ghana, for instance, government borrows from other international bodies to aid in the financing of its projects. Meanwhile, when government’s borrowing becomes too much, it affects its ability to invest in other ventures because its revenue will then have to be used to pay interest generated on the loan.

Debts are to be paid back at a later date, usually with interest.

Sometimes, how soon you can get out of debt depends on how much debt you owe and how much more you can pay to reduce it.

To be able to successfully pay off debts, create a plan, set a budget, and do not acquire more debt.

You can also consider cutting expenditure and restricting nonessential spending and use what you save to pay down your debt.

According to Investopedia.com, often, creditors require you to only pay a minimum amount. Pay more than the minimum to quickly reduce what you owe.

Debt consolidation is also an option that can help you restructure your debt into more manageable terms, helping you get out of debt faster.