Things You Can and Shouldn’t Go Into Debt For


There are things we covet or need so much that we’d go into debt for them. Sometimes, it would all turn out good — we’d get the loan and enjoy our purchase. But our debts can also take us downhill. We’d enjoy the money for a while, and later on, be doomed by the consequences.

People have gone bankrupt due to their debts. Others face countless lawsuits and were forced to sell or surrender their assets. Of course, no one would want to go through that ordeal, hence many people advise against going into debt. But if you need to buy a house now, should you wait until you save enough money, or take the risk and get a mortgage?

There are such things as good debts. They are the debts that help you generate income and increase your net worth. Sure, they can still dent your savings, but each repayment you make gives you returns or benefits that will help you build up cash in time.

That said, these are the things that are okay to go into debt for (a.k.a. good debts):

  1. Education

The more educated you are, the greater your earning potential will be. It also has a positive correlation with your ability to find employment. A college diploma is more likely to land you in a high-paying job than a high-school diploma. And if you have a master’s or a Ph.D., then you’d definitely be a fit candidate for executive or directorial positions.

Maximize the value of your investment by choosing a course that earns well. But make sure that it’s in a field that you enjoy, too because it’s hard to last or excel in a job that you don’t like at all.

  1. House

A mortgage puts a roof over your head, and that’s all the reason you need to apply for it. Besides, there’s a lot of ways to make money off a home. If it’s value has appreciated over time, you can sell it for a greater price after a decade or so. You can also put it up for rent.

  1. Small Business

Sure, starting a business is risky, but if you’ve researched and planned it thoroughly, then you can minimize the risks. And the things you’d gain goes beyond money. You’ll be your own boss, which provides many lessons and opportunities for growth. And if you’re lucky, you can expand your business either by branching out or selling a franchise. In time, you may also buy out your competitor’s company.

Don’t be disheartened by the statistics of small businesses failing. Your chances of success grow the smarter you work, and if you’re passionate.

Things You Shouldn’t Go into Debt For

If there are good debts, then there are, of course, bad debts. These things may seem necessary or essential in your life, but later on, you’d realize that they jeopardize your financial freedom.

  1. Credit Cards

Credit cards can be used for various purchases, but typically on clothes, gadgets, and expensive services. It’s not bad to have a credit card, but using it excessively racks up your expenses because of their high interest rates.

  1. Car

Cars don’t increase in value. It depreciates as soon as you start driving it, even brand-new ones. So better save for a car and reduce the risks, then pay for it monthly even when it has already become worthless.

Where to Get Loans

The get the best deals, apply for a bank loan or a favorable credit union loan. There are also online lenders, which can be a good provider of personal loans.

You’ll go through an approval process before getting a loan. So always pay your bills on time, because that’s one of the top factors that determine your repayment ability. Try to avoid any bad debt too before applying for good debt. The fewer your financial obligations, the higher your chances of being approved.

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