What are You Willing to Go Into Debt For?

by Miranda Marquit · 23 comments

Early in my college career, it became apparent that I was willing to go into debt for just about anything. Whether it was a new outfit, eating out, or a road trip, debt was no object. I had my trusty credit card. (Trusty credit cards by the time I graduated from college.) I really was the poster child for instant gratification and stupid money decisions.

Thankfully, I had a wake up call. Somewhere toward the beginning of my senior year in college, I realized that my credit cards were almost maxed out, and that interest was eating up most of my minimum payments. I further realized that I was still paying off that first trip to Vegas my freshman year, and quite likely those jeans I had discarded months ago. I began thinking about what was really important, and considering what I was really willing to go into debt for.

Everyone’s answer to the big question is different, of course. It comes down to financial priorities. You need to think about what is important to you, and consider what is important enough to pay back, with interest, over the course of years. For me, the things I am willing to get into debt for have been whittled down over the years:

A House

This is probably obvious. I suppose I could save up to buy a home with cash, but I’d rather just borrow for it. And I did. Three years ago, my husband and I bought a home. We enjoy our home, but we don’t have any illusions about it being an investment. We view it as a purchase, one that we were willing to make for the stability and other intangible aspects that come with home ownership.

An Education

While you don’t necessarily need a four-year degree to get a good job, I think that education is important. I took out student loans to help pay for my education and my husband did as well for graduate school. We could have went the “part time and going to school at the same time” route, but we both felt that it’s more important for us to get out of the whole process as quickly as possible.

A Car

Well, sort of. I’m not a big fan of financing a car, but my husband wants what he wants. And he normally decides to buy on the spur of the moment, so we have something for a down payment, but not for the whole car price. We put limits on it though, opting for relatively modest lease returns that don’t cost too much. We’ve only bought two cars in the nearly nine years we’ve been married, one at the outset, and one 18 months ago when we realized that it was finally time to become a two-car household. I’ve got my fingers crossed, though, that the next car won’t need to be financed.

No More Travel

Early in our marriage, we considered it essential to fly to New York to visit my husband’s parents — even if the trip had to be put on a credit card and paid off over intervening years. However, we have modified our habits in that way, instead saving up for travel, and having a fund set aside for emergency travel (for funerals, illnesses, and weddings). While I love to travel, I realize that it’s really not something worth getting into debt for.

I’ve learned over the years that few things that are, in my opinion, worth debt. By the time you pay the interest, and spend years fretting about making the payments on time, it truly does begin to seem like a prison. I try not to add up how much I could have if I hadn’t paid all that interest early in my 20s, but it’s hard not to look back with regret at what could have been.

These were my choices. What are you willing to go into debt for?

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{ 23 comments… read them below or add one }

Tracy July 6, 2010 at 6:02 am

That a good question Miranda. I agree with your ideas and I’d add medical or dental care for myself or my family members. Luckily we have good insurance but if I had to, I would go into debt to make sure my family stays healthy.

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KM July 6, 2010 at 7:52 am

I am lucky enough that I don’t have the big purchases that almost require people to go into debt – I inherited the car I currently drive and I live with my family in a house that they eventually want to hand down to me. My only debt ever was a line of credit on my bank account that I would sometimes deplete when I was between jobs. But I have despised credit cards for ages and never had one, so I think in my current situation, the only things I would go into debt for are things I have no choice but to pay for but don’t have enough savings to cover, such as emergency health care, major car trouble, etc.

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marci357 July 6, 2010 at 8:44 am

House and Truck if needed.
Portions of college that scholarships/grants don’t cover for my children.
Small loans to my children to help them out if urgent.
Urgent repairs to my home – meaning if putting it off til I had cash would cost more in repairs in the long run, then I would borrow and get it fixed immediately, and then pay myself back.
Medical, if life and death.

That’s about it.

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Richard Cox July 6, 2010 at 8:51 am

Hi Mirander,

I would have to say a car – it gives me independence to get out and about. The only downside being the cost of gasoline, insurance and servicing. If you look at the newer ‘green cars’ they all seem to cost double your normal car cost.

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KM July 6, 2010 at 8:56 am

The interesting thing about car gas I found out recently is that sometimes it’s still cheaper than commuting in public transport. Driving my car to work cost me about $150 per month, while getting passes for a light rail and a bus would be close to $250 per month. It amazed me how expensive public transportation is when you don’t have a student pass that allows you to use everything for free.

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MoneyNing July 6, 2010 at 9:32 am

That’s why this is such a personal subject. While most people can’t come close to just spending $150 a month on car expenses (gas, insurance, depreciation of the car, maintenance, etc), you found a way to spend just a little bit on it to make it even cheaper than public transportation.

Bravo my friend.

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MoneyNing July 6, 2010 at 9:34 am

What I’m willing to go into debt for is a tough question for me, because I’m not sure what I will do when I’m in the heat of the moment and need to decide.

That’s precisely why I work very hard to save AND make money, so I don’t have to make these choices too often.

If I have to give an answer right now, I’d have to say education, life threatening medical bills and a house.

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Miranda July 6, 2010 at 9:45 am

Great responses and some good food for thought. Since my whole family is healthy right now, and we have good insurance, sometimes I forget about medical expenses. But things could change. And that is something I would be willing to go into debt for.

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CreditShout July 6, 2010 at 12:22 pm

Health care definitely. Also, traveling to see my parents and family, but I would definitely budget for it.

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Kate July 6, 2010 at 1:14 pm

I wish I had realized the things I didn’t want to go into debt for when I was a senior in college. This is a great article and I really do try to put things into perspective when I am deciding what to buy. I did recently buy a new car, but only because the current one was continously dying.

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vered July 6, 2010 at 3:27 pm

A house and that’s it, but where I live that’s some serious debt. :)

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Kelli July 6, 2010 at 4:32 pm

A child. We are suffering through infertility, and I would pay any cost to be pregnant. It is so hard to accept that what most people get for free, we are not.

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C January 23, 2011 at 8:41 am

Maybe you should consider adoption. And no, fertility treatments aren’t worth going into debt for. Especially when they may result in nothing.

I feel sad when I think about how many living, breathing, existing children could be helped with the money that idiots waste on fertility treatments. My second cousin got fertility treatments and I have no respect for that shit.

Sorry.

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Tracy January 23, 2011 at 8:44 am

Adoption is not always cheap, it’s not always easy and it can come with a lot of baggage.

I believe that adoption is a wonderful choice, but I can understand why people would choose to go through treatment for infertility.

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C January 23, 2011 at 8:47 am

LOL…I see your fertility treatments were successful. Well, good for you. You can be parents of, in your words, your “own biological children” which of course is inherently better than being the parents of children that aren’t biological. I find it sad that you could only love something that you shat out of your crotch.

I have absolutely zero respect for people like you.

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Shadox July 6, 2010 at 10:04 pm

For me:
1. House
2. Education
3. Health
4. Help family

Pretty much nothing else.

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Sandy L July 7, 2010 at 9:33 am

ditto…

For #4,

My husband and I were close to being debt free. Just before my first was born and my uncle died, we bought a second home so that my elderly mother could live nearby. My uncle was my mom’s primary companion when I moved away and she had nobody else left.

It meant that we had to commit to staying a dual income household but it’s worth it to improve my mom’s quality of life and to have my kids know their grandma. I hope they will remember her home cooking, garden and berry patches.

It’s set our goals back, but it was worth every penny.

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basicmoneytips.com July 7, 2010 at 4:04 am

Generally speaking, it is safer to have secured debt verses unsecured debt. At least with secured debt you have an asset. While I understand it is not exactly this black and white, it certainly helps to think in these terms.

Also, paying down debt is never a bad thing, so do not think you should not pay things off because your money is working for you in some other account such as a savings account. Chances are you are not earning the interest you are paying on the debt you could otherwise pay down.

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Miranda July 7, 2010 at 5:24 am

I’m not sure about the secured debt v unsecured debt thing. When you have your debt tied to an asset, then you can lose that asset. You usually don’t lose your house if you default on a credit card, since it’s unsecured. But if you default on your home equity line of credit, you could put your large asset in danger. Of course, this is why unsecured debt costs so much more than secured debt…

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Cd Phi July 7, 2010 at 1:50 pm

I agree with the ones you’ve listed above especially an education. I know a few people who just took the job route after high school because they didn’t think college was worth the money. You can’t really put a price on an education. Well actually the colleges do(tuition) but the experience you get is invaluable. Another thing with going to school part time and working is that it tends to take a lot longer than it should and things get prolonged. Some people may even drop out so it’s just best to work at one thing at a time.

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Moneymonk July 13, 2010 at 7:21 am

Education and medical expense

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Leigh July 17, 2010 at 8:37 am

At this point in my life (41), I doubt there is anything I’d go into debt for. I will either save enough to pay in cash or forgo having that item. I understand how in young adulthood you may need to leverage some of your future earnings to secure necessities, but a problem arises when this mentality becomes standard operating procedure.

By mid-life I believe you should have saved and planned sufficiently for your needs so debt isn’t necessary. Most will likely disagree, but I’m speaking only for myself.

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Mary Ann August 31, 2010 at 5:20 am

Leigh, I definitely agree. I am a little older, 55, but retired at 53, have a TSP that I can start withdrawing at 59 1/2 – only have a house payment, assets are paid, though only one using a loan. I paid it off early, I cannot stand debt. As you get older you find what your priorities are and most people make intelligent choices with their money if they care about their future. Sometimes, you have to forgo the new car to gain control.

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