Choosing between Good and Bad Debt


If you’re considering any type of lending option, it’s important to consult financial advisors, close friends, family, and any other experienced individual about good and bad debt. The saying “good debt” initially sounds like an oxymoron. What could possibly be good or beneficial about debt?

Choosing between Good and Bad Debt

The Good

Let’s consider the fact that borrowing money could possibly give you the funds necessary to advance your career, business, or provide the opportunity to purchase a vehicle or home. Loans offer reasonable financing for individuals without the flexibility to instantly afford some of the larger price tags in life. Without loans, some people wouldn’t have college educations, their successful careers, homes, apartments, or other basic living necessities that they so often take for granted.

Student Loans

Federal  student loans offered through government accredited and backed lending institutions give individuals the opportunity to afford higher education. With the growing cost of a university education, not many families or individuals can afford tuition. Yet a college degree is almost necessary to succeed and pursue a worthwhile career to sustain your life, family, and eventually retire.

Without education, you’ll be at a loss when searching for a job that can pay an adequate or better salary to afford the higher cost of living. Housing, food and other basic living expenses continue to rise each year. Without a good job and career, expect to struggle.

Student loans make a college education possible. Whether you need to borrow a little or a significant amount, the job you can work when at college will help to pay off those loans. The interest rates often accompanying those loans aren’t high and interest doesn’t usually accrue while in school. Explore your educational options, apply for the FASFA, see what grant and loan opportunities are available, and make the right investment.

SBA Loans

Small Business Administration (SBA) loans provide lending options for small business entrepreneurs seeking financial assistance to get their products or services running. These loans are safe and almost insured up to 80% of the loan by the federal government. Most aspiring business owners can’t afford the startup or expansion costs for their business plans.

Short Term Loans

 There are numerous forms of short term loans available for small business owners or individuals confronted by a financial crisis that could possibly leave them or their families without food, heat, electricity, running water, or a place to live. As mentioned previously, the cost of living is very expensive and not all jobs pay a significant wage that covers those basic costs.

When living from month to month, individuals may need a little immediate financial assistance to cover unexpected costs such as medical bills, an ambulance charge or anything else that detracts from their typical tight monthly budget. There are signature, payday, car title, and various forms of quick short term loans. You can view examples of short term options from a company such as

Credit Cards

 Some people abhor credit cards while others use them daily for basic costs or even business expenses. It’s easy to lose control with the number of cards you own and how often you rely on them. When you pay the credit card minimums on time, don’t max out the limits, and find cards with lower interest rates, credit cards are perfectly reasonable. They provide financial flexibility to those who need it.

Yet individuals often max out their limits, stop paying their bills, and everything spirals recklessly out of control. In no time at all, collection agencies are hounding your cell and home phone trying to collect money and you could end up in front of a judge fighting the credit card company.

The Bad

No debt is necessarily bad. Loan options are meant to offer a person, business owner, or family the opportunity to finance something that they could afford over a long period of time. Countless expenses exist that no individual could possibly pay for them by them self.

Debt becomes bad when you stop paying the minimum monthly payments and start ignoring the lending institutions.

Posted in: Debt