When Should You Borrow Money

There is a school of thought which argues that debt can be classed as either good debt or bad debt. Good debt – any borrowing that enables you to make money or improve your chances in the long term, such as buying a car so that you can travel to work, or a student loan can be good debt, but only if you are sure you can afford the repayments and it does not leave you short at the end of the month. Bad debt – any borrowing that provides little or no return, such as borrowing to fund luxury items or expensive trips, or which you are likely to struggle to repay, is generally regarded as bad debt and you should avoid it if you can.