Debt. It’s one of those things most of us deal with at some point. Whether it’s buying a home, paying for school, or making those bigger life purchases, we’ve all heard that “not all debt is bad.” But is that really true?
Let’s break it down. The idea of “good debt” sounds nice, but it’s not always as simple as it sounds. Sure, taking on debt to pay for school or to buy a home might seem like a necessity in today’s world. But here’s the catch: debt can trap you if you’re not careful. And that includes the so-called “good” debt. Let’s talk about why all debt can be a financial pitfall—and how you can make better choices when it comes to large purchases.
Mortgages: Is Owning a Home Really the Dream?
Most Americans buy their homes with a mortgage, and many people see this as an unavoidable part of life. After all, how else are you supposed to afford a place to live when housing prices are sky-high? But here’s something you might not have considered: you don’t have to buy a house. It’s not a requirement to have a “real adult card.” If you’re childfree, you’re already thinking outside the norm—and that gives you even more flexibility in how you approach your financial future.
If homeownership is a goal for you, that’s great. But let’s be clear about what taking on mortgage debt really means. Sure, buying a house means you’re building equity, but let’s be honest—real estate isn’t always a guaranteed money maker. Mortgage rates and housing prices can fluctuate, and the first few years of paying off your mortgage are mostly about paying interest, not principal. In other words, you may not be as “wealthy” as you think just because you own a home.
The danger of taking on a mortgage isn’t just about the cost of the house, though. Mortgages make it easier to buy more house than you can actually afford, putting you in a tight financial spot long-term. Instead of stretching yourself thin, consider whether homeownership is really worth it, especially in a market that’s making buying a home a bigger financial commitment than ever.
Student Loans: Are They Really Necessary?
Ah, student loans. A rite of passage for many. But here’s the thing: borrowing money for school isn’t the only option you have. In fact, you might be able to avoid taking on student loan debt entirely if you get creative.
For starters, did you know that you could take CLEP exams to test out of some college courses? This saves you both time and money by earning you credit without needing to actually take the class. If you want to earn a degree but don’t want to drown in debt, consider taking classes at your own pace while working full-time. Working your way through school can reduce the need for massive student loans and prevent you from feeling like you’re being buried under debt.
And here’s a major truth: You don’t need a degree from a big-name university to land a good job. Your future employer is more interested in what you can do than where your diploma came from.
If you’re not into the traditional four-year route, trade schools are an excellent option. From plumbing to electrical work to alternative energy technology (a booming field right now), trade certifications can give you the skills to land a high-paying job—and you won’t be saddled with student loan debt.
The bottom line? You don’t have to take on debt just to get an education. Think outside the box and explore options that allow you to earn money and build a career without the burden of loans hanging over you.
You Don’t Have to Go Into Debt for Big Expenses
We’ve been led to believe that debt is necessary for major life purchases like homes or education, but that’s simply not true. It’s completely possible to save up for big expenses, especially if you start early. Yes, saving takes time and discipline, but it’s well worth it. And if you do decide to borrow money, don’t assume it’s automatically “good debt.” Just because it’s for a major life purchase doesn’t mean it’s the best decision for your long-term financial health.
Debt, even for things like homes or education, can still lead to financial stress and overwhelm. It’s about weighing the benefits against the costs, and making a conscious choice that supports your life goals. If it helps you improve your life or boost your income potential, it might be worth considering. But don’t fool yourself into thinking it’s a good deal just because it’s a large, necessary expense.
The Takeaway
Debt is a tricky thing. While it might feel like taking on debt for a home or school is “necessary,” there are plenty of ways to avoid or minimize borrowing. And even the “good debt” can come with pitfalls that you’ll want to avoid. Whether you’re considering a mortgage or thinking about student loans, take the time to explore your options and make sure you’re not just falling into a debt trap. In the end, it’s about making smarter choices with your money—and your future.