Debt can be used to improve your life believe it or not. While this website often preaches about getting out of debt, debt is also part of life. My personal belief if that debt is a good thing, if the debt is good debt. Good debt is anything you to into debt because you needed it, or to improve your life or life circumstances. Lets looks at some examples of this good debt that I am speaking of
* Loan to pay medical costs or for medical care
* Car Loans
* Mortgage debt
* Personal loans used for the right reasons
* Business loans to start a new business or to grow an existing business
All of these are examples of good debt. Debt or specifically credit and loans can be used in times of need, to round out or smooth ones income/cash flow so that one can live better than they otherwise could at the time. Of course this whole theory fails in practice if you are not able to pay back this credit for any reason what so ever. Nor can this train of thought be taken to extremes, one has to borrow modestly, for the things that they need. Some splurging can be alright, provided on does not borrow a high amount or make a habit of borrowing to splurge on unnecessary things. Lets delve in depth to good debts:
Student loans are always a smart bet. The reason being if you are committed to your higher learning, be it a college, university or trade school, you are gaining specialty knowledge designed to further your income. Eventually those student loans will be paid in full, but the higher income brackets and knowledge can last a lifetime. Student loans are basically investing in yourself, and while it is debt, it should not be looked on as such.
If you have a business, and your business is a sound one, never fear borrowing to grow the business. Many multi billionaires and millionaires became what they are today by not fearing taking on debt when needed. Also if you have just graduated college, but lack a professional wardrobe, such as a fine suit, shoes and brief case, borrowing for these things is also wise. You need to look presentable for your job interviews and eventual job in that profession. Basically any essentials that are needed for your work or business is good debt if you have to borrow to provide for that need.
It is usually a given here that most people will need an auto loan at some point in their lives. You can catch a break on some auto lots however, if your willing to take advantage of auto loan subsidies. These are subsidies large auto lots sometimes make to get rid of less popular auto models, or older models off their lots to make room for newer models. This can be the difference between paying 9% interest and 5% interest on your auto loan.
As with any financial tool, debt can be good or bad. It rests on your self control, knowing when to borrow and being responsible with paying back your debts.