Is it ever OK to go into debt? Most of us have spent money we didn’t have at some point in our lives — whether it was on college tuition, a mortgage, or a much-needed beach vacation. 

Around 80% of people in the United States are in debt,¹ yet debt has almost become a dirty word.

If it’s so common, why is it so hard to talk about? 

Spending money we don’t have can quickly become a toxic cycle. In the same way humans are prone to overeating and overdrinking, we’re prone to overspending too.

How do we feel after overeating or overspending?

Often ashamed, out of control, or like a failure. Debt can bring up a lot of strong feelings, so it’s understandable why we rarely hear it in conversations. 

While debt has a bad reputation for good reasons, there are some situations where going into debt may be a good thing

When is it OK to go into debt?

Choosing to go into debt is a big decision. Spending money you don’t have — even for a good reason — always includes some risk. And, unfortunately, you can never be 100% sure that going into debt will be worth it. 

Here’s a helpful first step. If you’re thinking about investing in something you don’t technically have the money for, ask yourself these questions:

  • Are you investing in your health or education?
  • What are the benefits and risks?
  • What are the fees, interest rate, and total cost?
  • How long will it take you to pay this investment off?
  • Do you absolutely need to buy this now, or can it wait?
  • Have you given yourself time to think this through?
  • Are you acting on impulse?
  • Do you have proof that this is a good investment?
organization skills at work

Five situations where going into debt may be a good thing


One of the most common forms of debt is student loans.

Thirty to forty percent of all undergrads take out student loans, and 70% of students who graduate with bachelor’s degrees have student loan debt.²  Without student loans, many people would not be able to attend college.

Investing in your education will hopefully increase your chances of securing a job after graduation. That’s huge and critical to your future security. So while you still want to weigh the pros and cons and map out how long it will take you to pay off your student loans, education is a good investment in most cases.

Beyond traditional education, investing in a certification program, course, or training to deepen your skill set can also be a smart idea. Making a nontraditional education investment could be the career boost you need, and the internet provides unlimited options.


Health is the next category where many people spend money they don’t have.

If you need an emergency procedure, you figure out a way to make it happen. If you need to see a specialty doctor, you spend the money. And even beyond necessary medical care, investing in preventive health is more popular than ever.

When you optimize your health now, you may be less likely to develop a condition that requires more involved care and higher medical bills down the road.

Examples include health coaches, acupuncturists, massage therapists, Reiki practitioners, and chiropractors. With the wellness industry valued at around $1.5 trillion,³ the list is endless — millions of people have complementary care investments of choice.

Still, you want to be smart about investing in your health. It’s easy to get lured into products and services that won’t actually help you. Don’t be afraid to ask questions, review testimonials, ask about any additional fees, weigh the benefits, and look at how long it will take to pay off your debt.


3.8 million new business applications were filed in 2022.⁴

Starting your own business is a situation where going into debt could be a good thing. By investing in the materials and people you need to get your business up and running, you may be able to create something that pays you for years to come.

It goes without saying, however, that starting your own business is inherently risky. You’re placing a bet on yourself when nothing is guaranteed. But some people are true entrepreneurs at heart, and this is what they are meant to do.

If you choose to go into debt to start a business, we suggest keeping your costs as low as possible until you can prove that your business model is successful. Also, make sure your heart is fully in it, you have the skill set to make it happen, and you accept that you might never get your initial investment back.

Starting a business can be the best choice of your life, but it’s important to be smart, give yourself enough time to think about it, and consult with fellow business owners.

If you can test your idea before launching, like working with a few clients for free or testing a product on friends, you’ll feel more confident investing in yourself.


Property is another investment that often pays off. When you buy a house or apartment, your money lives in that home rather than in your bank account.

Properties can increase in value over time as the housing market shifts. So, you might buy a house for one price and be able to sell it for a higher price later on in your life.

This is why some people choose to invest in a property and rent it out. In doing so, you create additional income through rental payments. Over time, or sometimes quickly, you may earn much more than you spent.

This is one of the most popular ways to go into debt, especially with more and more websites making it easy to set up rental properties.

Still, it’s important to remember that maintaining any property takes work because you can’t predict what will happen in the housing market. A crash could mean losing substantial amounts of money, so it’s critical that you consider your personal values, weigh the potential benefits, and make the decision that feels best for you.


Investing in a car is often a necessity if you live in an area without good public transportation or your job requires driving for another reason.

Around 84% of new cars purchased are paid off over time.⁵

If you need a car to get to work or school, and you don’t have the money to pay for it upfront, going into debt to get that car could be smart. However, always ask your dealer about the lowest interest rates and best payment plans available.

These are examples of “good debt” — situations where going into debt may be a good thing.

When considering going into debt, remember to read the fine print, and never be afraid to ask lots of questions. If you feel rushed to make a purchase, that’s a red flag. Take your time, and spend a few moments writing out your questions before entering a conversation.

man using calendar to organize work

What is Bad Debt?

Bad debt can include credit card debt, loans with high interest rates, money spent on products or services that don’t work, and any debt that becomes difficult to repay.

Why is it important to understand good debt vs. bad debt?

When you understand the difference between good and bad debt, you can save money over the long term, increase your chances of earning on your investments, and decrease your risk of high stress levels.

Seventy-three percent of Americans consider debt their biggest source of stress, which greatly impacts health.⁶  High stress has even been linked to a greater risk of heart health issues, like strokes and heart attacks.

By asking yourself the questions in this article before choosing to go into debt, you can make a more informed decision and keep your stress levels at bay.

When you approach spending from a place of empowerment and knowledge, there may be some situations where you feel perfectly fine going into debt.

Money is a deeply personal subject, and your decisions will be completely unique to you. Building trust with yourself is important since it can help reduce stress and increase confidence.


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