There are many arguments to support and dismiss good debt as a concept. The very word debt comes with a negative connotation and it sounds absurd to even say good debt. Yet, the concept exists and there are arguments to support it from real life people who have been through the good and the bad of debt.
Examples Of Good Debt
A good debt is generally a debt that you take on in order to acquire something valuable that you can’t live without. A home is an investment; its value appreciates in time earning you more money than you’ve put in. Many times, a home mortgage is the only way to actually own a home, unless you save the cash to purchase it outright. These are solid arguments that prove how debt can be good for many people.
Investing in the education of your children is another form of debt that is often perceived as good. Sometimes, your income is just not enough to be able to save money for education and the only way to achieve this is to take out a loan, which is ultimately another debt. Offering your children the right education feels like a duty as a parent, but sometimes access to a higher education could result in long term debt.
Most people need a car to go to work or to run their own business. Buying a car with a loan when you can’t afford it any other way is also good debt, since it allows you to grow as a professional and meet your financial obligations.. Unlike these forms of debt, excessive credit card debt is considered just the opposite as it basically creates an avenue for a never ending debt cycle.
How to Handle Good Debt
Although there are positive aspects of taking on debt, moderation is the key. Learn to control debt and not let it control your life and finances. Good debt is only good as long as you can truly afford to pay it. No one denies that you need a home; the problem is when you want to buy a home that is more than you can afford. The same goes when you borrow money to invest in bonds or stocks. Every financial decision needs to be carefully thought out and assessed to make sure that you can pay it back without getting into more debt.
In today’s society it is almost impossible to live without a certain amount of debt. The reason is simple: how many people are lucky enough to have hundreds of thousands of dollars just laying around ready to toss into a new home?
This recession was a tough lesson for many people. It showed that there was no such thing as a safe job and that large companies can collapse. There is no way to accurately quantify the true cost of good debt and that is the reason many consider good debt an oxymoron, a fairytale that sounds good in theory yet overwhelms you in reality.
Gaining control of your debt is easy, learn more about our debt management services by speaking with one of our counsellors today simply by calling 1-888-753-2227.