Tuesday, January 2, 2018

5 Reasons Why Debt Can Sometimes Be a Good Thing

Yes, debt sucks. No one wants to be in debt because it usually means we owe someone money, and that means paying it back out of our own pocket. No one likes the idea of a bad credit rating either. If you fail to pay your bills on time then you might end up ruining your credit score or potentially landing yourself in even more trouble. It goes without saying that having a debt to pay off is a situation no one wants to be in, but there are some positives to debt that you may not realise.

To make it clear, this article isn’t made for the purpose of saying that debt is a good thing. It’s not going to tell you to take a maximum personal loan from Personalloan.co just to pay for a home renovation and it’s not going to tell you to splash cash you don’t own. Instead, these are reasons that will help you cope with debt and give you a light at the end of the tunnel to look forward to.

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1. Debt helps you repair your credit rating

Having debt doesn’t actually lower your credit rating unless you fail to pay it back. For instance, taking out a mortgage means that you’re technically in debt because you need to pay it back. However, you need a good credit rating to take out a mortgage in the first place. Don’t let people fool you by saying debt means you have a poor credit rating. Many people put themselves into debt for the sake of repairing their credit rating for the future.

2. Debt was probably an investment

Whether it’s buying a home or a car, having debt often means you borrowed money for a reason. This article from huffingtonpost.com actually goes through a couple of reasons why you’d want to take out a loan in the first place, and they’re all valid reasons because you're investing in something.

3. Debt can help you realize your situation

Being in debt and being unable to pay it off is a good way to remind yourself of your financial situation. Living a lifestyle that you can’t afford is a quick way to plummet into debt and end up with a poor financial record. Let debt be the wake-up call you need to break out of your bad spending habits and change the way you treat your money.

4. Debt means you can afford a home

If you’re in debt because of a mortgage then you’re actually in a much better situation than you think. The fact that you could pay a deposit for a home and even be approved for a mortgage means you’re in a good financial spot. This is one of the many ways that debt can show you that you’re in a good spot. 

5. Debt can help you cover emergencies

And lastly, debt can help us cover emergency expenses. Whether it’s paying for a repair or fixing our car, if our savings can’t cover the expenses then we’ll be forced to take out a loan and plunge into debt. While it’s not pretty to be in debt, at least we solved our emergency.

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