Thinking Outside of the Debt Box | Searching for Positive Uses for Debt! Yes, Positive

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Historically, I’ve taken a negative stance towards debt.

For that, I do not apologize.

I’m very conservative by nature.  My own debt allergies started young.  The negative math consequences of debt never made any sense to me.  Debt does not seem like a good financial plan.

Back a dozen or so years ago when my wife and I bought our first car, I went out and borrowed money for the car.  We kept the loan for less than six months and I transferred over some funds I had in Canada to pay off the loan.  I finished school with $5,000 in loans.  Those were paid off within a year.

I’ve never looked back on any situation where I’ve borrowed money and said, “Rats, I wish I’d borrowed more money, more often.”  In fact, I attribute our (both my wife and I) debt avoidance as a key to our current financial health.

Yes, I would intellectually agree with the fact that there are situations where it makes sense to borrow.

Still, I freely admit that probably highlights more about me than how lending and economics operate.  It indicates that I grew up in a  middle class home where I had the option to save and thus avoid debts.  But not all of us enjoy that luxury.  I had the luxury to choose to avoid debt.

The poorer your background, the more likely it is that debt will play some role in your journey out of debt.  In fact, I think there are probably more situations where it makes sense for people in developing nations to borrow for certain things.  When I was doing a Financial Diet Seminar in Quito, Ecuador, one student called me on it.  He challenged me to realize that, for the poor, borrowing is often their only way to open a door.

So, I’m forcing myself to think outside of my negative debt box.

The Higher Education Option:

The Poor

If I came from a poor background and I had a son or daughter who had the opportunity to go to college and we couldn’t afford college, I think I’d 100% support the idea of him or her getting as many loans as possible.  For many, there is a certain window of opportunity to get a college degree.  If we don’t get it at the right time, life catches up to us, and we find ourselves committed to other things before we know it.  I’d encourage my son or daughter to get the loan with hope that they would get a much higher paying job post-college and that over time they could pay off their education.

The Middle-Class or Wealthy

If I were from a middle-class background, I’d also 100% support the idea of my kids getting a college degree.  However, I’d start training them at a younger age to get jobs, save money, and avoid college debt if possible.  That’s a luxury the middle class have that the poor don’t.  I’d also continue what I’m already doing as a parent – putting some money in college savings for them every year.

Positive Uses for Debt

I get a yucky feeling when I write that because I’m afraid that some of you will think I’m saying debt is good and want to go out and get this type of debt because it’s good.  Debt may be a best case scenario, but infrequently is ‘good’ the best word for it.

1.  Education

Investing in education through loans could provide the largest returns over a person’s lifetime.  If a student were diligent and dedicated, it would be a solid reason to get debt.

2.  House

Buying a house without any sort of a loan is a hard thing for a young couple to do.  However, I think the older we get, the larger percentage of a down payment we should have.  Of course, houses have the potential to go up in value, so it has the potential to be a wise investment (though I don’t think of a house as an investment).

3.  Business

Personally, I wouldn’t do this, but I have the option not to do it.  However, there are many business that need start-up capital.  This is especially true amongst the poor.  I’m a fan of organized forms of micro-lending and even at one time tried my own lending system when we were in PNG.  I wouldn’t advocate going out and borrowing massive amounts of money, but some people swear by it.  Michael Hyatt says you need to put skin in the game.  I wouldn’t, but I also have a lot less opportunity for significant earning and less opportunity for significant losses.

4.  Medical Bills

I suspect that there are situations where a medical procedure is a necessity, and I’d consider borrowing to do the surgery.

I’ve had a guest post on this blog on why going into debt for an adoption is the right thing to do.

So, help me think out of the box.

In what other cases or situations would you borrow money? Have you borrowed money for something and you’d go back and do it again?


  1. Violet says

    It wasn’t my choice, but due to the untimely death of my father, an unpaid housing loan needs to be paid. What I did was apply for a lower interest loan to pay off the previous loan and when I through God’s providence acquired a little inheritance, I paid off completely what was a 25 yr – loan. The value has appreciated much more and I thanked God for it. However, I would still not encourage having a loan.

  2. James Johnson says

    I posit:
    1. It is best to view we life as a gift from God via our parents for which nothing is required in return; life is a gift.
    2. Each “life gift” is unique. As unique as a snowflake.
    3. Jewish tradition, affirmed by the teachings of Jesus of Nazareth taught responsibility of the received gift assets.
    4. Core questions about debt:
    a. Will the debt increase the value of the gifts I have received from God?
    b. What is the price of the debt? The price of some debt is 27% per year for 20 years.
    c. Is the expenditure being creative or consumptive?
    5. Jesus teaching about the responsibility/accountability is instructive guidance.

  3. Lori says

    Sorry, but I can’t agree with you on the debt for education part. We are never guaranteed a high paying job to pay off the student loans. I know too many people who got expensive degrees and ended up either hating their job and finding satisfying work in a lower paying career or in our case 1 month after my husband graduated as a Doctor of Chiropractic, he was diagnosed with Rheumatoid Arthritis and can’t practice full time or even at all now due to the progression of the disease. Barring a miracle we will pay on his student loans for the rest of our lives. I also know of women who got their expensive degrees only to have a baby a few years later and decide they want to stay home to raise their child and can’t because they are saddled with student loan debt.

    • says

      Thanks for the feedback. I can certainly see how debt is a tremendous burden in your situation.
      I think that most middle class Americans take on too many student loans. I’m not encouraging people to get student loans (in fact I say that we should avoid college debt).
      However, if someone asked me if I had the choice between advising my kids not to get a college education or getting student loans I would still suggest they get loans as I think getting a student loan is a lower financial riks than limiting themselves to jobs that don’t require loans.

  4. Terry Willett says


    I, too, really don’t like debt and I’m blessed that my wife also doesn’t like debt. One item I’d like to add as a possible positive use of debt is to buy a rental house. Larry Burkett, in his book book Investing for the Future said that the three best invesments were (in order):1. A house 2. A rental house 3. Mutual funds.

    Most folks couldn’t buy a house without some debt. The same would be true of a rental house. Granted, I’m not sure I’d classify a house (to live in) as an investment because other than appreciation, it doesn’t produce any income. But, a rental house would.

    I would still advocate putting down as large of a down payment as possible so the rent would cover the tithe, taxes, insurance, property manager, and repairs. And yes, I realize that sometimes you can go without renters for awhile, or they skip out, or tear the place up. But, it still can be paid off early and be used as passive income in retirement, which is taxed at a lower rate than regular income.

    • says

      Your advice makes sense to me. I think with proper research, planning, and preparation renting could be an acceptable reason to borrow money. Again, not advising it, but it could make sense.

  5. Cortney says

    Honestly, I will have to agree with Lori. There are no positives sides of having a debt. Just take a look at multiple examples when people struggle to pay of their student loans throughout their lives. Sadly, but a lot of them carry it to the grave. You know, I always recommend young people to try to stay away from student loans or even online cash advance. It is a good idea to take a break for a few years once they graduate high school. Understand what their goals while they will be working and saving for education. Try to understand, that the value of having a higher degree diploma has been reduced once Recession has started. I would rather choose to have no education at all, rather than pay such a big price for it.

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