In financial markets owing money to banks and service providers and so on is rather usual. Of course, the debts you have in the financial markets are often a bit different kind. One of those debt-like instruments in the financial markets is called leverage.
Based on Investopedia
'The concept of leverage is used by both investors and companies. Investors use leverage to significantly increase the returns that can be provided on an investment. They lever their investments by using various instruments that include options, futures and margin accounts. Companies can use leverage to finance their assets. In other words, instead of issuing stock to raise capital, companies can use debt financing to invest in business operations in an attempt to increase shareholder value.'
If that didn't really tell you enough, then let me bring you an easily understood example from forex market.
Imagine you have $1000 in your forex account. The forex broker is offering you a leverage 100:1. What this means is that you can actually trade with $100 000. So in the simplest terms you can trade with $100 000 of which $99 000 has been borrowed. Doing this will allow you to earn from far more than just your own investment. It is risky, but the risk-return factor, with some good knowledge of the forex market, can actually pay off. And even though you have 'borrowed' $99 000, you can never lose more than your $1000.
If you don't understand how this can be, I suggest to read more articles from this site - we should be able to give you a good enough idea.
However, when it comes to individual debts nothing directly related to trading in the financial markets, debt is almost never a good thing. If you're in debt, you have a problem. Hopefully a small one, but a problem nevertheless. A leading nonprofit organization with an A+ rating,
InCharge Debt Solutions, has created a number of videos to educate and motivate you through a bit of humor.
If you want to get out of debt and are serious about it, start by writing down your budget. And calculate the minimum amount you need every month for food, utilities, roof over your head, minimum interest/debt payments and see what you are left with. Now use this money you have left for starting to pay off your debts. Do it every month, try to cut down as many expenses as you can. If you can save just $100 a month, it means you can get rid of $1200 of your debt within a year. Or if you can save as much as $1000 a month, just make your own calculations.
