17 Responses for "Is there such a thing as good debt?"

1. shtinkykat October 23rd, 2008 at 1:07 pm

   I’m very ambivalent about my student loans. I’m reading about how many students have to forego their dreams of higher education because they can’t get loans due to the credit crunch. On the other hand, I’m drowning in student loans $100k+ that I’ve struggled to repay for the past 10 years. In highsight, like purchasing a home, I should have worked several years, saved some money before attending law school, rather than taking out loans for tuition plus living expenses. So I guess I consider my student loans a “good” debt. But like everything else, too much of a good thing can be bad.

2. Sallie's Niece October 23rd, 2008 at 2:29 pm

   Here here shtinkykat I am there with you – too much good debt for my student loans. I don’t think all debt is “bad” per se just don’t take on more than you can bear.

3. Budgets are Sexy. October 23rd, 2008 at 3:44 pm

   Yup, student loans are 100% good debt! I really need to get my a$$ back in Grad School come to think of it…so proud of everyone doing that

   And here’s to a wonderful wedding!!! just wait until the day has come, and it’s all stress free and fun!! I kinda miss it now…haha…but DEF. not the planning/budgeting/worrying/etc.

4. Seattle Girl October 23rd, 2008 at 4:34 pm

   Ohhh yes…the bad debt is the sort of debt I lose sleep over, quit shopping for and reason that I started my blog – so that I could focus on repaying it as fast as possible. I consider part of it to be a little good… but not all of it was entirely necessary.

   I would not have been able to attend University without my student loans. Working my way through school kept them reasonably low, so I don’t stress about them at all, really.

5. sharon rose October 23rd, 2008 at 5:01 pm

   Hi there-a good debt has to be undoubtedly your mortgage and like you say consumer debt is a nasty one to have lingering around!!

6. paranoidasteroid October 23rd, 2008 at 5:38 pm

   Ultimately, debt is debt.

   There are times when I think the payoff is worth the debt – buying a house, paying for education. The rates on these loans are (usually) cheaper than those on credit cards, for example.

   Then again, even good debt becomes bad when you overload yourself. Having hundreds of thousands of dollars in student loans for a creative writing Master’s… well, there’s not a lot of chance of paying that off easily. A medical degree, yeah, the debt is worth it.

   For me, I hate having debt. Although I know it’s not the smartest thing, I probably will make extra payments on my student loans (I have to pay them off for 15 years! Who has time for that??).

7. paisley penguin October 23rd, 2008 at 6:08 pm

   If you are going to acquire debt then number one would probably be student loans if you need them. Alas, I did not complete my degree in university which I regret. I managed to pay for all but my last year of school without any student loans. I went to community college first and then the first two years at university were paid for by me with help from my parents. My loans are paid off at least.

   I regret not having the money to buy a car outright. I had to borrow $10,000 for my current car which has also cost me some money for repairs.

   The hubs and I own a condo and if I were to do it over again I would have waited until we had a more substantial down payment. It’s not in the bad debt category but I would have made different choices here.

   The worst debt I wish I never had was consumer debt and I can’t wait for it to be gone!

8. asgreen October 23rd, 2008 at 6:19 pm

   I believe there is such a thing as good debt. It’s debt such as student loans and a mortgage. What makes this good is how it has helped you obtain more opportunities but also because it has low interest rates. If my mortgage was one with high interest rates so I wasn’t actually paying much of the debt itself down I don’t think I would consider it good debt. I would consider myself in over my head.

9. Mia October 23rd, 2008 at 6:28 pm

   I always thought of good debt as any debt used to purchase appreciating assets (i.e. houses etc). I never go into debt for anything that isn’t supposed to appreciate. Having said that, I took a risk last year and increased my debt levels to purchase shares. Trust me when I say I am now in some pain and not feeling like that debt is all that good anymore! Although I would rather be in debt for shares which do have potential to increase in value again, rather than for something which has no opportunity for me to recoup the funds.

10. Laura K October 23rd, 2008 at 7:21 pm

    Before this year, I had never taken on any debt other than a small car loan – and then I got married, and we took on a mortgage and my husband started medical school. I keep telling myself that this is good debt, and we’ve tried to take out as little as possible – taking on a smaller mortgage, trying to pay as much toward med school tuition before getting the loan.

    Congratulations on not taking out any debt for your wedding! I managed to do so as well, but it was definitely tough keeping costs down so that I could put down that down payment and keep up the retirement savings, etc. Sometimes I wish I had maybe spent more on certain things, but at the end of the day, I knew I wouldn’t have anything tangible to show for it. More impressed guests, maybe (but who cares what they think?), but not better memories – I kept telling myself that all we really needed was us, a marriage license, and our officiant to make the wedding a success. The rest was just icing.

11. MoneyMateKate October 23rd, 2008 at 9:05 pm

    While I totally agree that student debt it good debt, I still think it needs to be balanced against the quality of the education. These days, if I had a teenager, I’d tell them that if they couldn’t get into one of the country’s top 20 schools, they should go to the state university and do so damn well that they’ll get accepted for transfer. Otherwise, private college is rarely worth it unless you’re a very directed 17-year-old. I say that as someone who feels that the $ spent on her own private undergraduate education was wasted – or would have been if it hadn’t mostly been covered by grants and scholarships.

    I’m of two minds about car loans – depends on the situation whether it qualifies as good or bad.

    Credit cards – never good, but occasionally understandable.

    Mortgage – current national nightmare scenario notwithstanding, I still classify this as good debt for most…well, maybe not as many as I think.

12. Holly October 23rd, 2008 at 9:26 pm

    For me I think the worst kind of debt is car loans. I don’t personally drive but it seems crazy to me that people will get into debt and then pay interest on that debt for something that will never increase in value (unless it’s super rare or something). You can almost never get more for your car than you paid for it so a car loan with interest seems absurd.

    As for student loan being good debt, I always feel that it’s good because it’s such low interest, but in actual fact I feel terrible for mine since I don’t work in the field that I studied and didn’t get a whole lot out of my 3 years there. Too tired for pondering though!

13. FruGal October 24th, 2008 at 9:42 am

    Shtinkykat & Sallies Niece – wow, I can’t even imagine what it must be like to have over $100k of student loans! But look at the oppotunities you’ve given yourselves by going to law school. One day all this debt will seem like a distant memory. My arts Degree didn’t cost anywhere near that, but I’d guess that I have nowhere near the earning potential of you guys!

    Paranoid Asteroid – you’re right, it is all about having debts you can manage, even ‘good’ debts become bad if you’ve got too much of it.

14. FruGal October 24th, 2008 at 9:45 am

    Holly & Paisley Penguin – you’re right about car loans. We don’t have a car at all at the moment for this exact reason – couldn’t afford to buy one without a loan right now, and there’s no way I’m taking out a loan to buy a car. Luckily living in the city with awesome transport links though, so don’t really notice the difference

15. FruGal October 24th, 2008 at 10:21 am

    Laura K – thanks! I keep trying to remind myself that it’s just one day and all that matters is that FruGuy and I are there to get married… but I can’t help getting excited about all the other stuff too! I haven’t been so good at keeping costs for the actual wedding low, but have managed to make room in our budget in other areas of our life like grocery shopping and not over-spending on entertainment, so that we can have the wedding day we want. I’ll stop now, other wise I will keep rambling about weddings all day…

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17. doctor S October 29th, 2008 at 6:43 pm

    Student loans are good debt, anything that is going towards higher education would be considered positive. This is what I tell myself every 2 weeks when i make a payment towards my 100k principle. Life is rough but you live and learn.