Debt is a dirty, nasty little word. Unfortunately, it is also something that nearly every single one of us will have to deal with in our lifetimes. It is a rite of passage in a way: when you become an adult, you will incur a debt of some kind. It is inevitable.

But what is “debt”, really? Debt is typically incurred from a number of different avenues: credit cards, car loans, student loans, personal loans, or mortgages. Some of these are more avoidable than others, though car loans and mortgages are almost a must. Nine out of ten people will own a car or a home and those are sizable financial commitments that require payment over a long period of time. You can’t do that without incurring some debt.

Debt Isn’t as Bad as It Sounds

Debt doesn’t have to be a bad thing, however. Because of these necessary debts, they can help build your credit up substantially. Paying these things on time or quicker than normal allow you to build up positive credit. The better your credit, the more things you have access to. Most importantly, the better your credit is, the better interest rates you will get. When you have great interest rates, you will pay less over the life of that loan than others at a higher rate would.

Knowing How to Handle Your Debt Is of the Utmost Importance

Unless you make a lot of money or happen to be lucky enough to get a huge financial windfall, you will be making monthly payments for a lengthy term. This is okay. This is normal. But the biggest key to reducing your debt is to take those monthly payments and make more than the minimal.

Why Pay More Than the Minimal?

After all, if you’re paying the minimal, you are meeting the requirements set before you, right? Sure, that’s true, and paying your bills on time will still help your credit. But paying the minimum keeps the term longer and that means more interest fees. Paying extra on your bills, even a little extra, helps reduce the amount of time that interest is building. It saves you money, bottom line.

Debt is a necessity of life but it isn’t as bad as it sounds. If you manage your debts responsibility and pay more than the minimum balance, you can pay things like your car or home off far more quickly and save a ton of money in the process.