In finance, many people hear the word debt and start running for the hills. While debt isn’t always encouraged, it can actually be a good thing from time to time. That is because most debt is made as an investment of sorts.
The most important thing to do to improve your financial situation is to understand and be able to control the amount of debt you have. Too much debt and too little can both be detrimental to your financial situation. This is because with too little debt, you aren’t making any plays or taking any risks to improve.
Many debts come from things like student loans, which help you get a good education and in turn a good career. Debts can also be accumulated by receiving loans to open a business or buy a vehicle. These are necessary expenses that will help improve your financial situation in the long run.
The trouble with debt and finance is not that you should avoid debt all together, but you should find a good medium. This medium should have just enough risk to have an average growth rate and reward, without you worrying about being buried in debt. A common mistake people make in financing is overinvesting. Spending five or six years in college to earn a four year degree for instance. Things like this can make it much harder in the long run to dig yourself out of your hill of debt. That is why you need to find balance.
John Labunski is a finance expert that encourages people to find a happy medium of debt that allows career growth.