I’m repulsed by credit card debt – so much so that I have never carried a balance on my credit card.
I’m anti-debt, yet, I use a credit card for most of our purchases. (The truth is, I just like the rewards).
We have had car debt, and student loan debt in the past, but have managed to get out from under their weight. We’re debt-free except for our mortgage.
I absolutely hate the fact that we even carry that debt, but to live in a wonderful home in a beautiful location was a choice that we made. Our home is an asset that will continue to appreciate for years to come.
But does that make my debt okay?
I recently read When It’s OK to Carry Debt which looks at two main times that it is okay to borrow money: for a home or for an education. The rationale is that both types of debt carry benefits that outweigh the costs.
I can agree with that concept. After all, homes appreciate in value and you have to live somewhere. A solid college education in a field that is expanding can yield a greater income and better benefits over the span of your career.
But… here’s the kicker:
All things in moderation. You don’t need a big, fancy McMansion. You don’t need an overpriced college degree.
Before you make the decision to take on either a mortgage or a student loan, make sure to evaluate exactly what your motives are for doing so. Determine what is most important to you, and shop around for the best solution.
You may find that a modest home requires less maintenance but still brings you just as much joy as a larger one. A public college may provide you with a better education than a very expensive private school. Make sure that if you’re majoring in Renaissance Costume Design, that you’ll be able to find a job that helps you pay back your $60,000 in student loans.
I don’t believe all debt is bad. I do believe ignoring the burden that debt will place on your future is.