Monday, October 09, 2017

# dealing with debt # finance

The Misunderstood Side of Debt



Debt is something that we all instinctively fear. No one wants to owe money to the banks and no one wants to be swarmed with high interests rates on loans that they have to eventually pay back. It can feel like the banks are sucking you dry for every bit of money you have, but you ultimately signed up for it when you decided to take out a loan.

Dealing with debt is incredibly stressful on both your mental and physical health. This is why many people steer clear OF debt and they want nothing to do with it; because they don’t want to end up repaying a debt that they can’t afford. However, there is a misunderstood side of debt that many people don’t seem to notice.

Credit: Pexels

“Positive” Debt

Debt can actually be a positive thing. Although it sounds hard to believe and rather silly, you need to keep in mind that debt is a (rather negative) way of saying you owe money. Now, while it doesn’t exactly sound positive with just that statement, here’s another way of saying debt: mortgages.

If you plan to purchase a home, you have to take a mortgage.  As explained in this article at moneysupermarket.com, it’s important to take out a mortgage if you want to home especially if you’re a first-time buyer. The only exception is if you can afford the entire home in a single payment, and there aren’t many people in the world who can claim to be able to do that. Homes are expensive and almost everyone has to take out a mortgage (aka, end up in debt) just to be able to afford one. Yet, why is owning a property celebrated despite it being a form of debt?

It’s all about the perception. Another positive form of debt is borrowing money in order to start your own company. You’re investing in a long-term solution and you plan to make enough money in the future to pay off the loan and finally make a profit. This is completely normal and happens every single day. There are more examples of positive debt, but these two should be sufficient for example purposes.

Credit: Pexels

Good Money Skills

Another positive side of debt is that it forces people to manage their finances correctly. Unless you have a terrible credit score and need the help of services like bestcreditrepair.co, you can’t do things like take out a mortgage or a student loan without having a good credit history. Having a high credit rating score is a bit like a badge of honour. It means that you’re fully capable of managing your own finances and it means that you understand how to correctly use debt to your advantage.

The point of this article is not to convince you to take out a loan as long as it benefits you. It’s here to illustrate that, if used correctly, debt can help many people and it’s an essential part of our lives despite having such a negative reputation. The next time you hear the word debt, think twice about the context!



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