Is It Best To Avoid Debt Entirely Or Be Smart About It?

When it comes to debt, we often hear about debt being a bad thing. The interest, the fees, the unbearable costs that cause many consumers to feel like they’re drowning all come to mind when we hear the big D-word. However, is debt so bad? Should we really be trying to learn to live with and control debt rather than avoiding it all together? In short, the answer is yes. Here’s why:

Why We Need Debt

While we have the ability to be our own people, and create our own success, the fact of the matter is that the vast majority of us are not and will not become rich people. As normal people with normal incomes, without the acceptance of debt, we may never own cars or homes. Often, the things that we want and need have price tags that are just too high to cover right now this moment. This is where debt comes in.

However, to get approved for the larger debts like mortgages and car loans, we need to build credit through the proper management of smaller debts like credit cards and personal loans. Nonetheless, it all boils down to a simple, undeniable concept. As average people, if we ever want to be a homeowner, we’re simply going to have to accept the fact that debt is just part of life.

Being Responsible About Debt

So, we know that debt is an important part of life, but how do we go about using it without digging ourselves into a hole? Well, the answer is relatively simple. Follow these steps:


  • Choose Debt Wisely – First and foremost, any time you need a loan, chances are that there are going to be multiple options for you to choose from. The first crucial step to the proper use of debt is doing your research and choosing your best option. For instance, when looking for a credit card, use a personal finance portal or one of the many search engines out there to search for at least 3 to 5 options that fit what you’re looking for. From there, comb through the terms and conditions and choose the one that comes with the lowest end cost to you!
  • Never Pay Minimum Payments – When it comes to revolving debts like credit cards and personal loans, it’s a good idea to make sure that you pay your entire balance off each and every month. This helps to avoid interest and show that you are responsible with your use of revolving credit limits. However, when it comes to larger loans like auto loans and mortgages, paying your balance off in a month isn’t going to be possible. Nonetheless, avoid paying minimum payments. The more you pay early, the less interest the debt will cost you, giving you the ability to pay your debts off faster and pay far less fees in the process.
  • Don’t Agree To Pay What You Can’t Afford – When you start working with debt, and doing so responsibly, you’ll soon realize that the world is at your fingertips, you just have to sign on the dotted line. This is where many get in trouble. We tend to think, “The bank is willing to lend me the money, I must be able to afford the payments.” Unfortunately, that’s not always true. Before agreeing to borrow any amount of money, it’s important to double check with your budget to ensure that you can make your payments and more, by their due date, each month!


The Bottom Line

The bottom line here is that while debt may be scary for many, it is also a necessary reality for most. So, instead of trying to avoid it, it’s often better to learn how to control debt, giving you the ability to build a great credit score and ultimately qualify for the home or car that you may need. By keeping the tips above in mind, you’ll be able to live synergistically with debt.

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