One thing that we are constantly told throughout our lives is that debt is a bad thing. Although this is true in a majority of cases, this blanket statement isn’t necessarily factual.
Going into debt can be a good thing and in a handful of cases, it can help you further yourself. Although this may sound confusing, you can learn more by reading below.
1 – Going to College or University
To improve your chances of finding a well-paying job, you should go to post-secondary school. However, it can be difficult to go to college or university if you haven’t saved up money for things like tuition, residence and food. If you enroll in a post-secondary program without enough money saved up, you may need to get professional debt help or potentially drop out of school.
This is why many young people apply for a student line of credit. Depending on where you live, you can apply for a loan at a bank or with the government. These loans can range from a few thousand to tens of thousands of dollars.
There are various benefits that come along with getting a line of credit. However, the primary advantage to lines of credit is that they are extremely cost-effective in comparison to other alternatives. This is because you only have to pay back what you borrow from your line of credit. As an example, you have a line of credit with a limit of $20,000, but you only spend $5,000. Instead of having to pay back the entire $20,000, you only have to pay back the $5,000 that you borrowed (plus interest).
By getting a line of student credit, you can:
- Pay for necessities like textbooks, food and rent
- Focus on your studies without worrying about your financial situation
- Apply to the schools that you want to, without compromising due to the cost
Not to mention, if you borrow a small amount of money, you can pay off your debt in a matter of months or a couple of years.
However, before getting a line of student credit, you should know this key piece of information. Unlike other forms of student debt (where you only pay after you graduate or leave school), you have to start paying off your line of credit instantly.
2 – Starting a Small Business
You’ve probably heard the saying, “you have to spend money to make money”. Although this saying may not be 100% true, it does hold some merit, especially if you are thinking about starting your own small business.
If you are planning on opening a store or starting a business, you most likely need capital. This is a term that refers to the wealth that an individual or group has accumulated. Having capital allows you to pay for essential things like:
- A storefront
- A website
- Employees
- Equipment
- Products
- Insurance
Without these important things, no business can be successful. This is why numerous entrepreneurs take on various types of debt before each of their endeavours. If you are planning on getting a line of credit for your business, be sure to do your research.
3 – Buying a Home
People like to say that “home is where the heart is”, but, in reality, your home is where the money is. Many homeowners see their houses as a major investment. These people have years or decades to prune and manicure their homes. Once the homeowner sees fit, they can sell the house for a profit.
However, if you’ve recently looked into buying a home, you’ve definitely noticed that they are rising in value. This makes it nearly impossible for people to purchase a house without going into some type of debt.
Although this debt may be scary initially, there is nothing to fear. If you buy (and sell) at the right time, you can make a small fortune off of your property. If you are worried that your credit is too low, you can contact a non-profit credit counselling agency that can provide guidance on credit rebuilding. These businesses can help you by offering their professional expertise and amazing debt consolidation programs.
Instead of being afraid of it, you need to learn how to use your debt to your advantage. If you want to go to post-secondary school, start a business or buy a home, then it may be the perfect time to go into debt.