When Is It Okay To Go Into Debt

You never want to be know as the extreme person, because that puts at risk of being an idiot, in what way. Some people that you should never go in debt, and some people people believe that you should always use others people money.

These extreme are extremely unreasonable, what you should try to be is a person that has common sense, that you can look at each situation and make an appropriate decision.

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It is Never okay to go into Debt to buy Things you Need or things you do need and cannot Afford

That doesn’t sound like it makes sense

But the reason I say it like that, is beucase a lot of the times we confuse needs with wants

And its very easy to do that

Here are some examples.

I need a Car ( true Statement ), I bought a 35k car on 5 year loan because I needed it ( Lie )

I need Presentable Cloths ( True ), I bought on a credit some clothes and I’ll pay them back because I need them ( lie )

I need a Degree ( true ), SO I got into 30k in student loan debt,, because I needed the degree ( that’s a lie )

Here is what I learned:

When debt is the first option, our needs start to become wants, because we start seeing what we buy and afford to make payments on, instead of what we can afford to get in cash

Here some examples ( but put into perspective )

I need Car ( true ), so I bought a used car I could afford to pay for in cash, it cost me $2000 but it runs

I need clothes ( true ), so I got some from discount stores, thirft shops and more that I could afford to pay for in cash ( fun fact I would buy 10-20 t shirts for $1 each at good will, and I still buy clothes on eBay

I need a skill to earn money ( true), I went to community college,I got a trade, or I saved up to pay cash ( also another way )

The point is:

You’re first option should be, how can I do this without debt

It is okay to go into debt to buy the things that you do “need”, but you cannot afford outright

The only in this life currently, that most people cannot afford to buy outright is a Home

Unless you buy a trailer for $5000 dollars and pay for parking or something extreme like that

But the point is most of us will need a mortgage ( because we need shelter, and it grants us security )

Here the problem with the extremes:

One extreme is save up and rent until you can buy in cash, that can literally a decade ( and your money will lose value, you’ll be likely to fail in that time )

Another extreme is ( buy from the budget the bank gives you and pay it off on their scedhile ( this lends to buying more house than you can afford, because their system is to make money on you for 30 years and you’re goal is to own a home )

The best results is to use common sense, buy something you can afford to pay off within 15 years that doesn’t take more than one third of your income net ( this gives you a lot of piece of mind and you’ll be done quickly )

But tommy what about everything else

Car: you need to, because you have cars available that you can drive for 5 years and save for the car of dreams

School: you don’t have to beucase of scholaships and savings

And mostly everything else

But this is hard:

It takes time

Some will do it and some will not

Many will fail, and few will get lucky and suckers will use those examples to justify themselves

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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