Blog 76: Is Been In Debt a Bad Idea After All?

According to Dr Boyce Watkins, Debt is like a high powered sport car. If you are careful, it will help you achieve goals more than you can imagine. If you are reckless it will kill you faster than a bad disease.

As strange as it may sound, some people don’t know how to spend money, especially when the money is not theirs. Hence lectures like Milton Friedman’s.

Desire to have worldly things that are normally out of our reach is what brings about debt, before we can proceed any further we need to ascertain what is the meaning of the word.

Debt is when we accept favours or borrow money from individuals or institutions that we promise to pay back later either in full via a lump sum or by installment. There’s is usually an agreed incentive added when repaying, this is called interest.

These interests can be anything from ‘free’ to 1000% of what you borrow depending on the creditor who lent you the money or favour. (In this article we will concentrate more on money).

How you spend the money borrowed is what determines if it is a good debt or a bad one.

Spending the money on depreciating or no value asset is typically a bad debt for example going on vacation and buying a car that is not generating any revenue vast enough to cover your debt repayment.

Procuring an appreciating asset with the money you will repay is the wise thing to do as your debt is then deemed an investment, for example borrowing money for ‘some’ educational course exempli gratia studying to be a doctor or buying a property like a house, painting or a car that appreciates in value.

Since a debt is an obligatory liability that must be serviced and repaid by law, profligating it on frivolities is not worth it because your chances of going back to borrow more is higher, exigent circumstances aside.

You get into debt to get wealthy like rich people do, getting into debt for anything else is seen as a bad debt unless of course you have the means to repay in full at anytime.

Your thought?

 

Author: FR76

Exciting blog, great mixed music content!