Not that long ago, when people needed extra large sums of money, their home equity was their go-to source of loans. After the housing crisis, home equity almost went the way of the dodo bird. Then, the new popular source to borrow from became 401(k)s. However, borrowing to expand your standard of living is NOT SUSTAINABLE!
People have forgotten what the purpose of borrowing is … it is an ability to purchase something and spread the payment (consumption of what has been purchased) over time. When debt is used too much, the scales are tipped towards unsustainability – how does one save money sufficient enough to maintain a standard of living that is beyond one’s means? Eventually the debt must be repaid – and then where’s the money for everyday expenses once retired?
Know the difference between Good Debt, Necessary Debt and Bad Debt.
What to do about paying off debt … various posts on different types of debt and how to repay it sensibly.
Bonus for those repaying federal student loans (then click on “Managing Repayment” tab).
Article posted at AdviceIQ.
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