What Kind of Debt is Good Debt?
We are always talking about getting rid of debt – and that the
only way to live is to be debt free. We also stress the
importance of paying off any and all debt that we have, and that
there is nothing better than living debt free. However, should
you never take on any debt? If you can’t pay in full for it
should you not buy it? Well, it depends on what you are
purchasing, because there are some things that are worth going
into debt for.
For example – you just graduated high school and are looking at
colleges but you know that you will take on a significant amount
of debt if you do. Should you not go to college? No! You have to
get a decent education, and this is where college comes in.
These days if you want to be a successful adult you really have
to have a college education. There are some professions where it
is not needed, but they are far and few between. A college loan
will enable you to get that education, and then the job you will
get from the education will enable you to pay back the loan.
So you graduate high school and you want to buy a home. Do you
skip the home until you can pay for it in full? Well, if that is
the case you will probably end up waiting a very long time for a
house while you throw your money away on an apartment. Getting a
mortgage is another kind of good debt. Not only do you have a
place to live, but you have a place that is yours. You work on
paying down that mortgage, and eventually you will be able to –
and then you will own that home debt free.
Finally, how are you going to get to that great job from your
new house if you don’t have a car? If you need a car to get from
one place to the other, you have to get an auto loan. You do not
however, have to get the most expensive car on the lot. You can
get an auto loan for a small car that does not cost a lot – pay
it off, and then use that car as a trade in whenever you are
ready for a new car. So there are definitely things that you can
get in debt for – but know that once you have taken on that
debt, it is your job to pay them down so that you can live debt
free once again.
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