What is good about debt? |
Question And Answer Category: Debt |
Question: |
| Dear Blankhelp Team, What is good about debt? I heard that debt is good, but with everyone complaining about it, how is debt any good? Am I, or are we using it wrong? Isn't the only good debt is the no debt? Thank you, Paul |
Our Advice and Answer: |
| Hello Paul, Generally, the use of debt is very powerful, and even is good. An example of what is good debt, is a home mortgage. Debt is the ability to get today and pay off, over the time that you could have saved up for it. Example, do you think you can buy a home for 100,000 saving up for 30 years? The answer is difficult to answer if you had to pay rent the full time. So rather than saving up for 30 years, and paying rent during that time, you can buy your home today with a mortgage, get into debt, and pay off your home over the next 30 years. This way you save from having to pay rent, and you get to enjoy your own home today. So generally good debt is debt you had to pay, that you were able to save up for, but get to enjoy it today, and over the course of the debt. Also, a real good indication of good debt is if you get to buy something with debt, and that 'thing' actually grows in value faster than the debt rate. Another example: Say you borrowed 100,000 dollars at an interest rate of 7% and then invested that money in bonds that have a return rate of 8%? Well that is, in our humble options, good debt. At the end you will have your debt paid off, and money left over. Good debt. Now what we do recommend, if you want to utilize good debt, we recommend you get in contact with a financial planner that can help you plan for your future. Hope we were helpful, The BlankHelp Team |
Debt Help and Advice Notice: |
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