Why Becoming Debt Free May Not be Always a Good Thing

Since the beginning of time we have been hearing that leading a debt free life is the perfect way to live a life. It is peaceful, without stress and tension free. However, there are people out there who believe that debts are of two types. You have a good debt and you have a bad debt. Now it depends upon you, will you choose a good debt or will you opt for the bad one.

Some even claim that being debt free is risker than having a good debt. This might seem conversational, but the statement does have merit and we are going to tell you how sometimes being debt free is not the best thing.

Asset Allocation

If you believe that debt free life is the perfect way of living, you might end up using your asset to clear your debts. Let’s take your home mortgage as an example. You clear your home using your assets, now the trouble is you no longer have emergency funds at your disposal.

Buy Assets the Increase Value

When we say good debt, we means you need to invest in assets are will increase over time. Not in something whose price will decrease over time. One good example, is a car. You lease a car and the more you use it, the lower resale value it will have. Whereas, you buy a house a good location, there is a high possibility that its prices increases with time. Thus, the debt you took on it would mean a good debt.

We are not saying debt is good, but we are just trying to make out point that using debt the right away can be helpful.                 If you are unable to figure out, simply pop over to debt free life and see what that has to offer.