On Why Some Debts Are Good

On Why Some Debts Are Good
0 comments, 21/10/2014, by , in Debt, Loans

Having debts are the worst thing that can happen to anyone, especially when repayments become a real struggle. When this happens, you’d end up wishing you never took out a loan or applied for a credit card in the first place. Some debts, however, are considered good, because they justify the ends.

Student Loan

If you have no other way of paying for tuition, taking out a student loan is an ideal solution. Because education is among the tools that can help raise your income potentials, it is a debt that has a good purpose. The problem with some students, however, they borrow money to cover an extravagant lifestyle, which isn’t part of the entire academic set-up. To avoid future problems, take out just the right amount of money. You should also have a payment plan in place, so you can clear your debts as quickly as possible.


Taking out a mortgage is good because you get to own a house in the end. But what makes it even better is that you can build equity in your home, and whatever payment you make is considered an investment. This makes buying a house more favorable than renting an apartment. But you have to remember that building equity takes time. If you don’t plan to live in your house for five years, a mortgage could become a bad debt. So make sure to think long and hard before you decide to take out a home loan.

Car Loan

This is often perceived as a bad debt, especially when the vehicle is a luxury. However, if used for business purposes or for a profitable cause, taking out an auto loan can be a good idea. But like most debts, anything in excess spells bad news, which is why you should borrow an amount that you can afford to pay. One thing is for sure, a debt is something to be paid off, whether it’s good or bad. This is why it’s very important to borrow only what you can handle.

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