Debt: Okay or not okay?

Debt is generally seen as a bad thing, and it makes sense that people would feel this way. Debt can screw up your finances for a long time. But is debt sometimes okay? Here’s a look at debt, what’s okay, and what’s not okay…

OK: You just bought a house – Most people don’t pay cash for a home, so if you want to purchase one, you’re going to have to take on some debt. The good thing is that housing is a part of pretty much everyone’s budget, and when you buy instead of renting, you’ll eventually own some real estate.

NOT OKAY: An experience – You may be tempted to take on some debt in exchange for an awesome trip, but when you get back, you’ll only have pictures, maybe some souvenirs, and a small load of debt. It’s probably a good idea to save up before you go see the world.

OK: Starting a business – Perhaps you’ve been passionately planning to one day start a small business. If you’ve got the drive and a good business plan, it may make sense to take on some debt in exchange for living out your dreams.

NOT OKAY: Stuff – When it comes to “things”, anything other than your home or your vehicle probably isn’t going to last a long time. Think about that the next time you prepare to swipe your credit card at a cash register.

OK: College – Student loans are a headache for some, but for others they are a tool to help achieve a dream of a college degree. There are a lot of benefits to higher education, so you may find that the debt is totally worth it.

NOT OKAY: Having an unbalanced checkbook – If you have a habit of poor budgeting and spending more than you make, you may be taking on some unwanted debt. Even if it’s a small amount, it could end up being a real headache if you don’t get it under control.

John Pettit

John Pettit

John Pettit is the Managing Editor for Through news, community, press, jobs and events, he keeps credit unions digitally informed throughout the day. Web: Details