If you owe money to banks or credit card companies, then it can feel like a pretty sure fire way to never get the financial freedom that you want. I mean, how can it when you have repayments to make each month? But in fact, while you don’t want to be a slave to debt for the rest of your life, there are some times in your life where taking on some kind of debt can actually help you. Of course, it is usually going to be a good thing when it is part of a longer-term plan, rather than just getting into debt for material things.
So with that in mind, here are some of the times when having debt could be a good thing for you. It would be good to hear what you think about this.
Low Interest Rates
When the interest rate is low, but there are other things that are booming, like the stock market, for example, then you may be better using your money to invest in the latter. Take your mortgage, for instance. You could be missing out on some gains if you have paid it off early. For example, if you have money that could pay off your mortgage early, but it is only around 3% interest rate, then you could put some of that money into the stock market instead to potentially get a better return and only partially pay off the mortgage. There is risk here, but if it is a calculated risk, you could be better off in the long-run with the scenario.
Missed Opportunities
In an ideal world, it is going to be the best idea to get your bucket list goals, or just goals in general, ticked off without having to get into debt (if you can’t afford it, you shouldn’t be doing it). But if you can make a financial plan to pay off a loan from somewhere like Heart Loans, then it could be a way to help you to achieve your dreams. You won’t miss the chances or opportunities presented if you are savvy with your cash and can pay back a loan afterwards. It could mean getting a business off the ground, and plenty more. Just be aware of how much the loan is costing you.
Renting
If you are renting a home, then it can feel like you’ll be trapped in that scenario for a long time. Spending money each month to pay off someone else’s mortgage instead of your own. Which is why getting a mortgage, to get you out of renting, can be a good thing for you and your future. Just make sure that you are setting the monthly repayments at something that you can afford, and remember there are other expenses when it comes to owning your own place, so renting is OK too!
Can’t Build Credit
If there was ever any debt that you did want to have, like a mortgage, then you need to have shown that you can pay back money when it is loaned to you. So if you never have any credit, you can’t show that you will pay it back. That can impact your credit score, as there is nothing to measure. So having credit and paying it off, can help you to build a credit score.
Read and learn more about Debt topics here at Magical Penny
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