Debt Is Not Always Bad, It Can Be Good Too!

Nothing in this world can be called good or bad. Everything depends on the context and is so very conditional. Take debt for instance, it can be both good and bad depending upon a number of conditions. Though usually debt is looked upon with a prejudiced eye and is usually considered happening due to poor financial status of the debtor, it need not always be so. You can always take a loan when you are not having sufficient funds in hand to further your ambitions which may be a career upliftment, or business expansion or setup.

You should have a clear plan of repaying your loan and should be able to stick to it. Taking debts is an art and you should exercise your judgmental skills while doing it. Never be over optimistic while taking a debt even for a positive purpose. When taking a loan the immediate gratification that you get due to increased funds at your disposal is quite often misleading. Whenever I take a loan, I always think about how I’d pay back the money as a top priority to-do task. Right from the first day of loaning I always start implementing my plan. I always set a clear time frame in which I’m going to pay back the money and also chalk out any installment schemes which I can comfortably stick to. If there’s no installment facility, I save up the amount of money that I’ve got to pay back after the time agreed upon. Your repayment planning should also include the interest that you’ve got to pay in addition to the debt. Many people ignore that taking it as a small side amount, but over a period of time this might actually accumulate.

One way for saving yourself from bad debt is to get out of the bad habits that increased consumer credit facilities encourage in us. These days consumer credit is available in abundance. Credit card facilities, bank financial aiding, and private mortgaging facilities is making money easily available on loan. In fact money lending has become a lucrative business now. What we as borrowers are failing to see is that with easy availability of loans we are getting into the bad habit of being dependent on external financial aid for our monetary needs. A  infographic from Billshrink on this shows that personal savings has dipped down to remarkably low levels and consumer debt has risen up to remarkably high levels due to easy availability of consumer credit. A Finance Metrics blog analyzes the reasons for low personal savings.

Well, I’ll not  really blame the lending agencies for making cash easily available to you, though they do play their part in luring you to take loans by offering you attractive repayment schemes, such as, zero percent interest or a low monthly EMI. Even if they offer it’s you who is supposed to be careful. Many lenders and banks, as seen in the recent property purchase funding schemes seem to have given loans without assessing the repayment capacity of the loaner. This will only put you in bad debt. It is you who should be careful.

At the end I can say, loan is good provided you use it for a constructive purpose and repay it in time.