Why Stressing Over Debt Isn’t Always Necessary!


Many people get stressed out whenever they get into debt.  This is mostly because many people cannot afford to pay off their debts in full each month. 

If you are only making the minimum payments onto your credit cards, loans and lines of credit each month the accumulated interest charges can quickly add up to be very costly.  Debt and repaying debt can be very stressful, but people should always look on the bright side of accumulating debt.  It’s OK to get into debt as long as you get something out of it.

One of the main reasons why people get into debt is because they want to get an education.  Many people can’t afford to pay for their tuition, books, and living expenses while studying full time (or part time) and therefore they apply for student loans. Just like any type of debt the cost of your student loans has to be worth the education that you are receiving in return. The cost of your education has been worth the added benefit of a profitable job after graduation. It doesn’t make (financial) sense to accumulate $200,000 in student loans if you will never earn enough income to support the student loan payments and eventually pay off the debt. Receiving a higher education is always an asset, but at what cost?

Another reason why many people get into debt is because they want to purchase a home.  Accumulating debt in the form of a mortgage loan is a good reason to get into debt because the value of homes should usually increase over time.  As the mortgage loan debt is being paid off the value of the home increases; this is why purchasing a home is very often seen as a long term investment.  It is OK to get into debt if you are purchasing an asset that has a value greater than the amount of your debt.

It is also very common for people to purchase their car through financing.  Many people have mixed emotions towards car loans because automobiles are a depreciating asset, this means that the value of your car decreases over time.  People who want to sell their car before the loan is paid off can find themselves with negative equity; this means that the amount of the car loan is greater than the actual value of the car.  However, not many people can afford to pay for their car in cash; therefore a car loan is the only option.

Assets are something that you can enjoy or benefit from over the long term and it is OK to get into debt if you are getting something reasonable in return. However, it is never OK to get into debt over irresponsible spending on materialistic goods such as clothes, vacations, personal entertainment, and dining out etc.

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Published January 29, 2013
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