The myth
Some people want to avoid getting into any kind of debt. Some are so afraid of debt that they refuse to even get a credit card. People like these would rather save up for something and buy with their own cash instead, just to avoid debt.
Why people believe it
There are countless stories of people who have lost all their money because of debts. There are also people who are saddled with debt their whole lives, some even passing on the debt to their children.
Is it true?
Debt can be a very bad thing if treated irresponsibly, because it piles up. However, when well-managed and within your income, debts can be good if the money borrowed is used for something that will grow your earning potential. Here are some examples:
- An education loan can help you pay for an education that you can leverage when looking for work.
- A business loan can help you meet the capital requirements of starting business so you can get it operational sooner.
- An auto-loan can get you a car you can use to get a job that may be far but pays a good salary.
- A home loan can get you a house while the price is still low.
- A credit card can make purchases more manageable by distributing it into installments.
