What Is the Proper Use of Debt?

Kimberly Watson, Editor in Chief
April 26, 2012 /

For many Americans, their greatest difficulty in planning their financial future, is building the foundation.  However, the basics for doing this are relatively simple, but if they want to make proper use of debt, continuous self discipline is a critical ingredient.

The experience of the recent financial crisis has resulted in a significant number of people having too much debt, poor credit and an apprehensive attitude towards the future. Blame for the crisis has been placed on financial institutions and the government.

However, for those affected by the crisis, the cause of it is dismissed as unimportant when considering their predicaments. Loss of jobs and income; blemished credit status and foreclosed homes have all contributed towards a general feeling of financial apathy.

The proper use of debt could be a financial advantage when used correctly, but if misused, it has the capacity for financial ruin. Therefore, its management must be carefully applied. Positively, it provides the means of acquiring great assets, for example, buying a home, furthering education, self development or building a business. However, it also has the potential of becoming a weight in life that is difficult to remove.

There are various aspects to consider when considering proper use of debt and borrowing money. They include whether this action would further their capability to improve their lifestyle and is it a profitable investment for the future! The answers for these particular questions would both be affirmative, when related to buying a house and furthering education.

It is significant, that the purchase of a home and investing in education are both related to your lifestyle, but without any guarantee of future wealth. However, both options are related to provide opportunities to create wealth and are then examples of the proper use of debt.

 

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