Читать книгу Personal Finance in Your 20s & 30s For Dummies - Eric Tyson - Страница 46

Not all debt is bad. In fact, some debt can help you better your life and improve your financial situation in the long run. Taking out a loan for the right reasons can make good financial sense because you’re making an investment. Loans for your education, for buying or starting a small business, or for purchasing real estate can give you a return on your investment. Furthering your education, for example, can increase your income-earning ability. Borrowing to invest in a good piece of real estate or a small business should pay off over the years as well. Despite the potential, however, there’s no guarantee that you’ll earn a return above and beyond your loan’s interest costs. Money may get spent and borrowed on the wrong type of education or an inferior real-estate property, for example.

Borrowing and taking on debt for consumption — such as for buying a new car, new furniture, or electronics or for a costly vacation trip — is a bad financial move because such borrowing encourages living beyond your means. And the interest on this so-called consumer debt is generally not tax-deductible and carries a higher rate than the interest on mortgage debt. (Check out the section “Paying Off Consumer Debt” later in this chapter for tips on how to eliminate such costly loans.)