When It’s Okay to Get Into Debt

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Getting into debt is one thing that most moms avoid. Some aren’t too comfortable with the thought of owing anybody anything, especially money.

We’ve all heard the horror stories. Women forced to pay unreasonable interest rates on outstanding loans. Collectors hounding families. Cases going all the way to court. Of course, nobody ever wants to find himself in such circumstances. But did you know that there is such a thing as a good debt?

What makes a debt good? There are a number of factors.

A good debt is about making a sensible investment on your financial future. Getting a pair of designer shoes to make you feel good, buying a new car to impress others—these are not examples of good debts. Though you may get a certain amount of psychological satisfaction on making such purhases, it would not make a positive contribution on your bank account, now or in the future. Take note as well that these things do not appreciate in value. As soon as you use them, they start to depreciate soon after. So if you must have those sexy pair of shoes, save up for them!

An example of a good debt is a housing loan. Not only will it provide your family with a place to live, it also gives you a big financial asset once you’ve paid it off. Plus, the value of your property will grow over time.

A good debt not only sets you on the course towards financial success, it also doesn’t impact negatively on your check balance. Getting into debt to take the vacation of your dreams, for example, is not going to contribute to the improvement of your future financial prospects. Yes, travel can make you wiser, but it shouldn’t be at the expense of your budget. Taking out a loan to finance your child’s college education or your post-graduate degree are examples of good debts. Such undertakings will definitely make your lives better in the future. Education is an investment, and probably one of the best you’ll ever make!

A good debt is one with a clear and specific reason as well as a realistic payback plan. If you have a potentially profitable business idea, for example, backed up by solid market research and a doable business plan, then getting a loan to start it up is a good idea. Make sure that you incorporate the cost of paying back the loan on your business plan to make it viable. If your existing business needs just a bit of financial boost to steer it towards rapid growth, then getting a loan is the best solution. Again, make sure to incorporate the cost of paying back the loan on your projections and you’re good to go!

Fortunately for mompreneurs, a number of financial institutions are only too happy to contribute to their future financial prospects. BPI Family, for example, has made financing more accessible to mompreneurs through their Ka-Negosyo Business Loans. By making funds available to mompreneurs at very friendly terms, BPI Family hopes to help more and more moms realize their entrepreneurial dreams!

Of course, a good debt can turn swiftly into a bad one if you are not diligent in paying it off. Just because your reasons are noble doesn’t mean you’ll have to work any less. In fact, you’d have to work all the more harder in order to make sure that you stay on the right path. With diligence and persistence, you will be well on your way to a bright financial future!

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BPI Family Ka-Negosyo has partnered with Mompreneur Manila to come up with a series of informative articles with the objective of educating and empowering mompreneurs and aspiring entrepreneurs.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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