Having the Guts to Take on Good Debt (Responsibly)

credit-card-1583534_640A study released findings recently that the average American dies with $62,000 in debt. 73% of Americans owe money when they die. Those are scary figures, and they underscore the reason many people have for not taking on any debt whatsoever. They don’t tend to make headlines, but these people walk in our midst. They have no credit cards, they’ve never taken out a loan, and they have basically no credit history. Maybe you’re one of them.

People who live this way usually do so because they see it as the right thing to do. Debt is scary and maybe even wrong! Isn’t it irresponsible to borrow money you might not be able to earn enough to pay back? The thing is, there are many different kinds of debt. Some of them are designed to help the average person advance in life. In fact, it’s very difficult to accumulate wealth without some debt.

If you want to build a better future, you have to learn how to work with debt. This doesn’t mean that you will be swamped with bills you can’t pay. If you learn the ropes and practice sensible debt practices, you should be able to totally change your financial life. But you have to have the guts to take on a little debt first. Here are some responsible ways to do just that.

Buy a House. A mortgage loan from a bank will have affordable interest and a lengthy term, making it very affordable to pay back. In fact, many mortgage interest rates are so low that they are barely above the rate of inflation. This means that you can borrow the money – almost – for free. All you have to do is pay it back, which is really a payment to yourself, as all your payments are kept as personal wealth in the form of equity. A mortgage loan is great debt to have. You could also consider a short term loan from an alternative lender to cover the cost of smaller purchases such as home furnishings.

Have a Credit Card or Five. Having credit cards is an important way to build your credit. Having a credit card doesn’t mean you have to use it, very much or at all. Having a little bit of credit debt that you pay off quickly is actually good for your credit history and credit score. It shows that you can borrow money and pay it back, without spinning out of control.

Get an Education. Even though student loans are getting a lot of negative press, it doesn’t mean they’re evil. Student loans have affordable interest rates, meaning that it’s cheap money to borrow. If you educate yourself in a field that will greatly increase your earning potential, you can have them paid back in little time, then go on to make a lot of money for yourself.

Debt is an essential part of the modern personal finance experience. If you try to go without it, you may have success, but you’re more likely to limit your future financial possibilities. Healthy debt is part of being an adult, and you should learn how to use it if you have not already.

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