We’re usually led to believe that debt is bad. Carrying a large load of credit card debt is something that just didn't happen a few generations ago. Older individuals might say something like, "If you can't afford it, don't buy it." That’s usually good advice. It isn’t a good idea to carry a lot of credit card debt, but there are times when debt can be a good thing.
1.A great investment opportunity. An investment opportunity could be in real estate, the stock market, a business, or some other prospect. Regardless of the type of investment, if you have a chance to earn more than you’re spending, debt could be profitable in the long run.
2.Buying a house. Most people won’t ever be able to save enough money to buy a house without borrowing some money. Because a house will usually appreciate in value, this is another instance where borrowing money can actually make you wealthier in the long run.
3.Starting or growing a business. This is another example where you’d be borrowing money in an effort to make more money than you would pay back on the debt.
4.Education. Borrowing money to go to college can be a good reason for going into debt.However, be cautious about taking on too much debt for college. Many students borrow carelessly, and it takes them decades to pay it all off.
5.Using a lower interest rate loan to pay off higher interest rate credit cards. If you have credit cards with interest rates from 18% to 22% but you could get a home equity line of credit at 6%, taking on that low interest loan could be considered good debt.
People who tell you that going into debt is bad are genuinely trying to be helpful. However, there are times when going into debt can be a good thing.
If you're going into debt just to pay your monthly bills or if you're running up credit card balances to buy a bunch of things you don't really need, this is considered "bad debt." But, if you’re borrowing money for an investment, that can be considered "good debt." Debt can actually be helpful as long as you’re using it to make a profit and come out ahead.
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