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When it is convenient to go into debt and when it is better not to do it

Debt creates distressing and stressful situations. However, sometimes having access to credit or a loan is very positive. Of course, access to these resources requires acting in a responsible and disciplined manner.

What reflects a positive response from the bank or financial institution when you apply for a loan or a line of credit is that you are a reliable person, because your finances are good and your credit history is positive, but you should always be careful because situations such as The unforeseen, when they are serious, serious can cause difficulties for you to fulfill your commitments before the bank or other financial institution.

Going into debt to organize a lavish party, which far exceeds your economic capacity is perhaps the worst thing you can do to use bad credit. Photo: Pixabay.

We present examples of the circumstances conducive to getting a loan or a line of credit, when it is positive to do so and also when you should not do it because it is something negative.

Examples of positive debts

Credits are beneficial to your finances when you use them for something positive, that benefits you and your family. It is best when what you buy increases in value over time, this is the case that you or someone in your family study, a professional career, or that you acquire a house or land.

It can also be positive that you buy a car. Unlike the race and the house or the land, the value of the car will decrease over time, but if you buy a new or pre-owned one you can use it for a few years without problems, and it can even mean savings. To make this happen, check which brands are whose value decreases at a slower rate.

If you use credit to start a business, to make adjustments in the place or acquire machinery, obtaining a loan is a good decision because you will make an investment and, if it works, you will obtain profits that can even help you pay off the loan or financing that you have achieved.

Other positive purchases for you and your family are appliances, such as the screen, the washing machine or the refrigerator, they will give them more comforts. Something essential that you must buy are computers and the equipment that supports the learning of your children.

Examples of negative debts

It increases considerably what banks earn when you buy goods or services whose prices are beyond your ability to pay, almost always the result in these cases is that you do not meet timely payments, forcing you to pay more interest. You must be aware that you cannot and should not consider extra money that comes from a credit card, less as extra income. When making purchases with a card, you transfer a significant part of your income to the bank.

It is a terrible decision to buy things that are worthless or with a short useful life, which last a very short time in good condition. You will be forced to continue paying for something that is already useless.

Going into debt so that you, your family and your guests celebrate a lavish party, which far exceeds your financial capacity is perhaps the worst thing you can do to use bad credit. That waste of money, for something intangible that lasts a few hours, results in months and even years of effort to pay what you owe to the bank.

If you do not pay on time and you are undisciplined, due to the increase in your debts, you can reach the extreme of falling into a situation where you can no longer pay.

More information in our Credits Section.