When is Debt Okay?

There may not be a right or wrong answer to this question, but it’s one I hate answering.  People often see me as an authority on the topic, and if I give an inch, some will take a mile (and they shouldn’t).

Usually, someone’s asking me this question when they want to go into debt.  My answer is always:

It depends.

What does your vision say about debt?  How have you handled it before?  Has it created stress?

The argument can be made that debt that pays for itself (by the way, it never really does) is “good”.  Good debt is great when it is good, but many people have had the experience of good debt becoming bad debt.  It once worked and then it stopped, even if it was brief.  A temporary set back when it comes to debt can be hard to recover from.

So what are some things to consider when thinking about whether or not you should go into debt? Before moving forward with it, consider these 6 questions:

1. What, if anything, will be securing the debt?  

And can that asset easily be sold to pay off the debt if it becomes a burden?

2. Do I have reserves available?

In other words, if your asset stops performing as expected, will you be able to make payments?

3. What does God want me to do?

4. Would it be better for me to rent than buy?

The argument can be made by many that it is smarter to buy with a mortgage than to pay rent.  This is absolutely true if the goal of life is to accumulate more and build wealth, but if your vision says that you want to be free, to have less worldly responsibilities, renting may actually be better.  Again, what does your vision say?

5. Life or debt? 

Medical expenses are something that people go into debt for quite frequently.  This saddens me.  Many complain about the broken medical system, and there is no question about it.  It is broken. 

However, I find that it’s mostly because of broken people.  If we all took care of each other, we would not have the same issues.  This is why I like the medical sharing plans.  It’s a group of people who share in the burdens of one another in lieu of insurance.  But if you don’t have anything, then by all means I think that going into debt for necessary medical expenses is fine.  There are many that will help with that debt if you seek out the right people.

6. Can I get this done another way?

Have you considered every angle? For instance, can you take a cheaper vacation that you can pay for with cash? Is there a cheaper car that will meet your needs before you take on that large car payment? 


If you aren’t sure about going into debt, the number one thing you can do is practice taking your time.  Wait a week or a month before making the final decision.  If you can go a month without the thing you were going to borrow for, you can likely go much longer.  Sleeping on the decision will also give you clarity and help you to make the decision from a better place.

Personally, I think if we were all debt free, the world would be a much better place.  There would not be an unmet need in the world if everyone were debt free.  But debt creates need and ties peoples hands from being able to help those who do have needs.  

And since debt does exist and it is an option for many of us, you can help yourself make the right decisions by taking a moment and thinking about these 6 questions.

What do you think? Let’s have a conversation. You can write a post in our community and tag me. I’d love to discuss and share ideas.

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