Debt can be a positive thing. But education and discipline are crucial, especially when you’re tempted to go into (more?) debt for short-term, feel-good reasons.
Here are 10 reasons why debt can be good.
SEARCH RATES: Consider getting a personal loan to pay off debt. Go to Bankrate.com to shop for the best rates.
1. Debt can finance huge endeavors
Where would many powerful businessmen and women be today without debt? You can use it to do things it would take too long to achieve otherwise.
Or, you can use it to build foolish and avoidable debt — like adding a pizza to a maxed-out credit card and paying for it for seven years with interest!
2. Debt means someone thinks well of you
Yes, they are creditors, but if you have debt, that means you’ve passed a credit check, and now someone besides your mother thinks you’re pretty wonderful.
3. Debt is spending tomorrow’s money today
If what you are buying with debt will last into tomorrow, then it may be OK.
For example: You need a car, you can swing the payments for the next five years and you intend to keep the car for seven years. Plus, interest rates are low, you may save on gas, be safer and not back into things (if you get the rear camera)!
RATE SEARCH: Comparing car loans? Check interest rates now at Bankrate.
4. Debt is part of modern life
If you try to save up the full purchase price for a house, you’ll already be in the nursing home before you can move in. Interest rates are hyper-low, prices are rising and you’ve got to live somewhere.
RATE SEARCH: Don’t have much of a down payment? Search today for a low down-payment mortgage on Bankrate.
5. Debt doesn’t have to be forever
Short-term debt for short-term needs, where you have a plan to pay off the balance in a reasonable time frame, makes sense. Long-term debt for short-term needs, does not. (See pizza reference in No. 1.)
6. Debt is good when you can responsibly afford it
If you have a sound reason to borrow the money and can afford the payments, you’re good to go.
If you don’t, don’t make the mistake of using debt and hoping that you can afford to pay for it later. Don’t make hope part of your debt repayment strategy.
7. Debt isn’t a vice when you have an exit strategy
Even if you can afford the payments today, have a firm plan in place to pay it back before today becomes forever.
8. Debt is still cheap in 2017
Yes, the Federal Reserve raised rates in 2016 — from zero percent to next to zero percent.
9. Student loan debt can be a positive thing
Student loans can be helpful, especially if you know what career you want or your career field pays enough to make up for it.
RATE SEARCH: Do you have enough money for college? Apply for a student loan today at Bankrate.
If not, consider getting your post-secondary education on the cheap by joining the military, enrolling at community college or choosing a career that will forgive your loans over time.
10. Debt can be eliminated
Other than student loan or mortgage debt, you can recover from most debt meltdowns in two to three years after a bankruptcy, real estate short sale or foreclosure.
ADVISER SEARCH: Want help reaching your money goals? Find a financial adviser near you today.