The Grateful Debt

_{By Bromwich+Smith staff | Reading time: 2 minutes, 53 seconds | 577 words} 

Thanksgiving is a time of gratitude. We reflect on what we’re thankful for, and what we have. From family and friends, to health and wealth, we get that warm, fuzzy feeling when we feel truly thankful. And if you’re lucky, you can carry that gratitude with you long after the holiday ends. Even with an ongoing pandemic, it’s still just as possible to experience such gratitude because it’s about being grateful for what we have, not what we don’t. With that all said, many things that we have in life are possible because of debt, and for that, we should also be grateful for certain debts.

Let’s explore this debt that we are grateful for, that is, the grateful debt. Otherwise known as good debt, this typically refers to debt that will ultimately increase the value of an asset. Here are some examples of good debts that we are grateful for:

• Mortgages: You have to live somewhere, so you might as well live somewhere that increases in value almost every year. Taking out a mortgage is something that typically pays off in the long run.
• Student loans: Many people that want an education need help paying for it, and it’s worth it if you are buying an education that will lead to a well-paying, satisfying career.
• Car debt: This can often be considered a bad debt because a car drops in value as soon as it leaves the car lot. However, car loans can be relatively low, and if you need a car to get to work, this can help you get there.
• Business debt: Entrepreneurship is celebrated and encouraged in Canada, and requires both a well thought out business plan and money to back the plan. If you have enough ambition and business acumen, borrowing money to start your own business could be the best investment you’ll ever make.

On the flip side, bad debt, or debt that no one really wants, refers to debt you’ve incurred to purchase items that don’t increase in value over time. Here are some examples:

• Credit cards: These cards can ruin your financial health, largely due to access to money you aren’t able to pay back, and high interest payments that are crippling. Using credit cards to finance a life that you can’t afford ends up costing you much, much more over time, especially if you can’t pay down your credit card balance.
• Payday loans: Though quick and easy, the short-term cash that you can get typically isn’t worth the finance charges that you will pay.
• Car loans: We talked about how car loans can be good, but choosing to finance an expensive car is not a good move. As a general rule, never finance luxury, in any capacity.         

Debt is more nuanced than being “good” or “bad'', but whether it’s a mortgage, student loan, car payment or business debt, the bottom line is this: if the debt will pay you back more than what you put into it, that is debt to be grateful for.

If you carry bad debt, or it’s good debt turned bad for whatever reason (and there are lots of them!),  Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and help you get your life back. Reach out today for a free, confidential, no obligation consultation. Now offering video appointments with clients, Bromwich+Smith’s Debt Relief Specialists are available for initial free, no obligation, confidential consultation by phone at 1-855-884-9243 or request a call back at contact us page.