Debt Is Good What?! – 5 Times That Debt Can Actually Be GOOD Debt
Not sure if debt is good? Here are five times that it’s fine to go into debt because it’s the good kind – GOOD DEBT as opposed to bad debt.
5 Good Reasons for Going into Debt
When you hear the words DEBT IS GOOD what do you think?
Does your mind shrivel away in fear or does it get excited about the potential opportunities it has to offer?
Here’s the thing: we’re usually led to believe that debt is bad.
Think of some of the negative sayings you may have heard:
Better to go to bed hungry than to wake up in debt.
He who is quick to borrow is slow to pay.
Debt is the worst poverty.
Too many people buy things they don’t need, with money they don’t have, trying to impress people they don’t even like.
Older individuals might say something like, “If you can’t afford it, don’t buy it.“
This is definitely great advice especially since a few generations ago carrying a large load of credit card debt wasn’t even an option.
The decision to go into debt alters the course and condition of your life. You no longer own it. You are owned. Dave Ramsey
If you think nobody cares if you’re alive, try missing a couple of car payments. Earl Wilson
Obviously it isn’t a good idea for anyone to carry a lot of credit card debt, but there are times when debt can be a good thing.
Good debt is a powerful tool but bad debt can kill you. Robert Kiyosaki
Check out some good reasons for going into debt:
DEBT IS GOOD
TYPE # 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.
- For example, if you’re able to borrow money at 5% and invest it for a 15% to 20% return, that would be a good reason to take on some debt.
An example of good debt is the debt on the apartment houses I own. That debt is good only as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt. Robert Kiyosaki
DEBT IS GOOD
TYPE # 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.
- If your mortgage payments will be the same as, or less than your current rent payments, a home loan could definitely be considered “good debt.”
I use debt to buy assets. Most people use debt to buy toys and liabilities. Robert Kiyosaki
DEBT IS GOOD
TYPE # 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.
It is definitely a good type of debt, because in life you either build your own dreams or someone else will hire you to build theirs.
Start a part-time business and make as many mistakes as you possibly can while you still have your daytime job. Robert Kiyosaki
I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance. Steve Jobs
To be successful, you have to have your heart in your business and your business in your heart. Thomas Watson Sr.
DEBT IS GOOD
TYPE # 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.
- If you want to be a doctor, lawyer, or engineer you’ll need quite a bit of training. Those years you’re spending in college can be quite expensive.
- Going into debt can be a good thing if it allows you to get into a lucrative profession.
If you’re going to borrow money to go to school, ensure that your chosen profession is in demand and that you can earn enough to pay off your loans and still have enough left over to live on.
The most successful people in life are the ones who ask questions. They’re always learning. They’re always growing. They’re always pushing. Robert Kiyosaki
Education is the most powerful weapon which you can use to change the world. Nelson Mandela
If you think education is expensive, try ignorance. Andy McIntyre
An investment in knowledge pays the best interest. Benjamin Franklin
DEBT IS GOOD
TYPE # 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.
- Just ensure that once you pay off those high balances on your credit cards, you don’t start charging things and running them up again.
- Use the low interest rate loan to help get out and stay out of debt.
Now I know, the people who tell you that going into debt is bad are genuinely trying to be helpful.
However, there are in fact times when 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.”
On the other hand if you’re borrowing money for an investment, that can be considered “good debt.”
Good debt accrues assets that generate positive returns and externalities. Anthony Scaramucci
Debt can actually be helpful as long as you’re using it to make a profit and come out ahead.
So please next time you hear the word DEBT don’t automatically freak out.
Instead take the time to work out whether this debt falls into the good or bad variety category and make sure to choose wisely.
The debt-free mentality is largely the product of emotion – how nice it would be to never make a mortgage payment again. Good debt gives you some leverage that helps you increase your net worth. Phil Cook
Today, there are three kinds of people: the have’s, the have-not’s, and the have-not-paid-for-what-they-have’s. Earl Wilson
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