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.