Ways Debt is Good for You

While too much of the “wrong” kind of debt should be avoided, here are some ways certain types of
debt can be used to your long-term advantage.

“Good” debt is debt that can help make you money – like investing in an appreciating asset such as a
home or your own education. Another reason why mortgages and student loans can be classified as
“good” debt is because they’re tax-deductible.

Taking on debt makes sense when interest rates are low, allowing you to pay for things without having to
liquidate higher returning investments.

Debt can also help fill gaps in your cash flow. For example, if you are in a profession where a large
chunk of your income comes from a year-end bonus, accessing a home equity line of credit could help
you meet your cash needs during the year.

If you have good credit, you can also save thousands of dollars by using someone else’s money, like
taking advantage of zero percent financing at a car dealership.
Ideally, your goal should be to only borrow for things that appreciate in value.