Is it Right to be Scared of Being in Debt?

There are many people that get very worried about the idea of being in debt. They worry that if they get into debt it could lead to problems or they have a fear of knowing that the will owe money and have the constant stress of that. Other people have no fear at all of debt and will borrow as much money as they need to buy the things that they want. They feel that having things is more important than worrying about the cost of the debt. Most people will fall somewhere between the two extremes. It is important to have the right attitude towards debt though, so that you can use it to your advantage and not be taken advantage of by it.

There are lots of different types of debt and so it is not right to really classify it altogether. Borrowing money to pay for a home, is very different, for example, to borrowing the money to buy a pair of diamond earrings. Each borrowing decision needs to be made carefully and it is just as important to use the right type of debt as well as choosing whether it is right to borrow in the first place.

Whenever you choose to borrow money it is important to consider whether this is the right thing for you to do. If you consider every decision like this, even every credit card purchase, you will be more likely to make the right decisions and stay in control of your debt. It can be thought by some that every debt that is taken on with careful consideration can be considered to be good debt, but every hastily bit of borrowed money is bad debt. This is just one aspect to borrowing though, the reason for borrowing is also important. If you are borrowing to better yourself, perhaps to start a business, to go to university, to buy a home, then these could be considered good debt. This is because you should get more out than you pay in, so even though a mortgage will be expensive and it will take a long time to pay back. You will gain from an increase in value of the home and save money that you would have otherwise have paid out in rent. An education should help you to get a better paid job and a starting a business should also be a way to getting a better income and lifestyle.

Having a certain amount of concern for being in debt is a responsible thing to feel. Having a debt, whether good or bad is a big commitment. You owe that money and you will need to pay it back. Normally you have a repayment schedule and you will agree to pay back a certain amount each month. This means that you have a responsibility to make sure that you have that much money available each month to be able to pay back, as well as enough money to cover all of your other costs for the month. It is worth thinking about how you will manage that in the long term. You may be sure of being able to manage in the short term, but it is harder to know what your situation might be in the long term and whether you will be able to manage the payments or whether you need to consider not taking the loan. If you lose your job, become ill and unable to work, need to take time off to care for children or relatives then you will find that you have less income available to make the repayments. Also if your costs increase perhaps due to increased interest rates, fuel prices, food prices, a growing family etc then it is possible that you may struggle again. Therefore you need to consider whether you are happy to risk taking on debt even if these things may happen.

Having some concern is a good thing as it gives you an awareness of your responsibility. You know that you need to be able to make the repayments. However, getting too stressed about debt can hold you back. If you are worried about having debts hanging over you then it could stop you buying a home or furthering your education. These things can make a big difference to your life and your earning potential and so if you worry too much and decide not to borrow, you could find that you are holding yourself back. However, only you know how much of an impact the stress of debt will have on your life. You need to think about past experiences and how you may cope now and whether you think that it will have too much of a negative impact on you. If you have had problems with debt in the past you may worry that you will have them again and perhaps this might be justified, so you will need to be sensible.

Leave a Reply