A lot of people believe that debt is something you should always avoid at all cost. Honestly, I use to think the same way too. The word 'debt' alone sounds like a burden that nobody wants to carry, but along the line I realized that not all debts are actually bad. Some debts can work for you instead of against you, but the problem is that many of us don’t know the difference.
So let’s talk about it from what I’ve learned so far.
Why People Hate Debt Most people see debt as a trap, and to be honest, they are not wrong because if you borrow money and can’t pay it back, it becomes stress. I have seen friends who took loans just to impress others, buy expensive phones or clothes, and later they start hiding from people they owe. That is what bad debt does to you.
Bad debt is when you borrow money to buy things that don’t add value or generate income. Things like buying a car you can’t afford, traveling for luxury, or even throwing a big party. When you use debt for those things, you are just taking from your future to satisfy your today, and the future will surely come with its bills.
So What is Good Debt? I first heard about this concept from a guy I respect so much. He said to me, Debt is not bad, but what you do with it matters. That got me thinking, and I started paying attention.
Good debt is when you borrow money for something that will give you returns, like investing in education, buying a property, or starting a business that can pay back the loan and still leave you with profit. For example, someone taking a loan to go to school or learn a skill that can increase his earning power, that is an investment in yourself. Another example is buying a house instead of renting forever, especially if the house will appreciate in value or generate rent for you later.
I know someone who took a loan to start a small food business. It was risky at first, but now that business pays her bills and she has even expanded. That’s what I call a smart move. On the other hand, I’ve also seen people take loans to buy the latest iPhone. After a few months, that phone is outdated but the loan is still there waiting for payment. That’s the difference.
Debt is a Tool, Use it Well From my experience, debt is like fire. Fire can cook your food and keep you warm, but it can also burn your house down. It depends on how you use it. If you take a loan without a plan, you will suffer. But if you take it for something that can produce income or increase your value, then it’s a different story.
Before you borrow, ask yourself these questions:
Will this debt make me money or just make me look good? Can I pay it back without killing myself? Do I have a plan in case things don’t go as expected? These questions can save you a lot of headache.
Final Thoughts Debt is not totally evil. It becomes evil when you use it the wrong way. Good debt builds you up, bad debt tears you down. I’m still learning every day, but this is what I’ve seen so far. At the end of the day, it’s all about self-control and planning.
What do you think? Have you ever taken a debt that helped your life or one that messed you up? Let’s talk in the comments.
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