When is taking on debt a good idea?
Credit Card Debt
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Increasing your debt may be beneficial if the loaned capital is put to good use, as in purchasing real property (that may be valuable or increase in value over time), by obtaining an educational loan that may increase your earning power in the future, and by using a home equity loan to improve your home to increase its resale value at some future time. Additionally, if you take on low-interest debt for such valuable activities, you free up your cash reserves to do other things such as investing. In the case of mortgage loans, the interest you pay on that loan is deductible against your reported income when you file your tax return each year.