what is debt

Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor. It is the amount of money that one party owes to another, typically money. Debt may be owed by a sovereign state or country, local government, company, or an individual. Debt is used by many individuals and companies to make large purchases that they could not afford under other circumstances. Unless a debt is forgiven by the lender, it must be paid back, typically with added interest. Loans, bonds, notes, and mortgages are all types of debt. Debt can be secured or unsecured, with a fixed end date or revolving. Consumers can borrow money through loans or lines of credit, including credit cards, while corporations can also issue debt in the form of bonds to raise capital. To avoid or limit debt, making careful choices about spending and borrowing can help. Avoiding debt can help build financial well-being, which means having control over your money and being able to make choices that allow you to enjoy your life. To achieve financial well-being, it’s good to plan ahead, manage your spending, spend less than you earn, and have a plan to save money each month.