Yes, you’ve heard it and I’ve said it a thousand times: Debt is EVIL! But to be fair, debt has its place in our lives.
The tricky part is knowing when it’s really appropriate and not just a short-term, feel-good spending fix for whatever strain of blues has a hold on us.
If you’re paying off debt, a personal loan is one option. Go to Bankrate.com to shop for the best rates.
Here are 10 positives to consider if you’re planning to take on debt in the new year.
The Bankrate Daily
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1. Debt is a financial power tool.
Where would Donald Trump be today without debt? You can use it to do things it would take too long to build otherwise. Or, you can use it to cut off your fingers — like adding a pizza to a maxed-out credit card and paying for it for 7 years with interest!
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2. Debt means someone thinks well of you.
Yes, they are creditors, but you’ve passed a credit check and now someone besides your mother thinks you’re pretty wonderful.
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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 5 years and you intend to keep the car for 7 years. Plus, interest rates are low, you may save on gas, be safer and not back into things (if you get the rear camera)!
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4. Debt is part of 21st century living.
If you try to save up the full purchase price for a house, you’ll be in the 22nd century before you move in. Interest rates are hyper-low, prices are rising and you’ve got to live somewhere.
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.
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6. Dreams can be built using debt (but so can nightmares).
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.
Hope is a wonderful thing, but it shouldn’t be a part of debt repayment strategy.
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7. Debt with an exit strategy is no vice.
Before you apply for a personal loan, gauge your financial situation and how much you can comfortably take on.
Some lenders will look to ply you with more than you can handle. That means you might end up biting off more than you can chew and fall into a debt trap.
Even if you can afford the payments today, have a firm plan in place to pay it back before today becomes forever.
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8. Debt will still be cheap in 2016.
Yes, the Federal Reserve will be raising rates in 2016. Like from 0% to next to 0%. And, they plan to raise rates very slowly so as not to upset the economy or your budget.
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9. Student loan debt can be a positive thing.
A student loan can be helpful, if you know what career you want, if your career field pays enough to enable you to pay back your loans, and if you’re willing to work hard enough to compete for and win a job in your field.
If not, get your post-secondary education on the cheap using community college, the military or choosing a career that will forgive your loans over time.
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10. Debt can be eliminated as a last resort if things don’t pan out.
Other than student loan debt, you can recover from most debt meltdowns in 2 to 3 years after a bankruptcy, real estate short sale or foreclosure.
No one wants to nuke their debts, but if you have to, it’s not the end of the world.