Believe it or not it can actually be beneficial in some ways to be in debt.
Boy, it sucks to be in debt! At least, that’s the general thought floating around most people who are in debt. Making payments month after month is a hassle that none of us want to deal with, especially when there are so many better things to do with our money.
Who wouldn’t rather be drinking with friends, eating fancy meals, shopping, taking a vacation or racing around in a brand new sports car? However, those are just pipe dreams while you have debts to pay off, or are they...?
Believe it or not it is actually beneficial in some ways to be in debt. The notion’s controversial sure, but it is none the less valid. Some people actually use debt to make money or get tax breaks. Yes, it’s possible if you know how to use it to your advantage.
Not convinced? Need some specific examples? Well here are seven examples of how being in debt can actually be a good thing:
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It is a great way to build up a good credit score – If you’ve never been in debt, your credit score is hardly going to be something to brag about, let alone help you finance anything. A little debt is one of the best ways to build up your credit profile.
Without it, you can’t get a mortgage (that is if you even want one with the credit crunch in full swing), buy a new car or get a loan in an emergency.
There is a catch though. If you don’t keep up with your monthly payments then you could damage your credit score and end up with a worse one than having no credit at all would give you.
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You might be able to get a break on your taxes – Some debts, including mortgages, can be offset against your taxes because it’s tax deductible.
Anything that means you don’t have to pay out as much is worth it!
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You could use it to build wealth – Yes, you read that right. Some people actually borrow money to generate wealth from it with various money-making opportunities.
A variety of loans are actually made available to people looking to invest in such opportunities. With tax breaks thrown in for good measure, you could really boost your ability to make money by using the bank’s rather than your own!
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You’ll avoid dipping into your savings – If you dip into your savings every time you need money for groceries, gas or anything else for that matter then you’ll have nothing left to fall back on within a few months.
Buying these items on credit cards does mean debt but it also means ready cash so at least you have something left over should you have an emergency. With the credit crunch sucking the life out of people with no savings, you can’t afford to be in that position right now.
This doesn’t include those people using savings to pay off debts, but rather deals with those annoying everyday expenses that we have to find the cash for.
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Identity theft – When you get to the point where you’re so far in debt that no creditor in his or her right mind would ever lend to you, then one positive is that nobody else is going to steal your identity.
Well, it at least makes you far less susceptible to identity theft. Although you should continue shredding documents, hiding your SSN, and keeping track of the mail you’ve received, it is far less likely that you’ll find someone has taken out accounts in your name.
After all, if you can’t take money out in your own name then nobody else is going to be able to do it for you. Imagine the greater peace of mind you’ll have.
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You wouldn’t have to pay any alimony if you divorce your other half – All kidding aside, it’s true! Lawyers have to take into account how much debt you have before they come up with figures for divorce settlements and child support. If you’re in debt then they should deduct debt from assets before a settlement is reached.
Might not be the best judgement call but vindictive and cunning for sure.
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Nothing will teach you how to manage your finances quicker – Before you got in debt, you probably didn’t put too much thought into how you managed your finances.
After getting yourself into debt, the responsibility of managing your finances comes easier than it would otherwise, because most people that have experienced debt are reluctant to get back into it.
As the old saying goes, we all learn from our mistakes. Pity debt’s a big one that takes years to pay off though.
* The above ideas are not for everyone and if you are considering adopting any of them then please bear in mind that if not done appropriately and with good measure, they can backfire. These points are only effective if done correctly so, as always, be careful with your money.
