Most of the time, when we talk about debt, we talk about the detrimental effect it has on our lives. We talk about the spiral of building debt, how to avoid it or break out of it. But debt isn’t necessarily a bad thing. It’s neutral. To be in debt is simply to owe someone money and being open to it could actually highlight some very helpful uses of it. Here, we’re going to look at when borrowing, or taking on debt, isn’t always a bad thing.

When you have debt

In some cases, looking for lenders when you’re in debt isn’t another sign of the dreaded debt spiral, it can afford you some real breathing room. In particular, we’re talking about debt consolidation. Consolidation works as part of a financial action plan by getting one lender to accept the debts you might have racked up from other lenders. That way, instead of paying off several different people, you can boil it all down to one payment. You may be able to extend the loan, giving yourself more time to pay it off, and you may even put a cap on higher interest rates, such as those caused by credit cards.

When you need cash right now

Sometimes, you need cash immediately and you don’t have access to it normally. Perhaps there’s a home crisis, sudden damage to your car, or even a medical emergency that you have to pay for. Quick loans can help you acquire the cash you need a lot faster than bank loans, often approving and paying within a day or two. Of course, in the long term, it’s better to prepare an emergency fund that can handle most financial emergencies. But when you absolutely have to pay, then making use of your credit can help. Just ensure that you create a budget design specifically to help you pay back that debt once you’ve taken it on. Don’t be passive about it, make an actionable plan you contribute to with every paycheck.

When you need to build your credit

Your credit score and history is how much lenders judge whether or not you will be a reliable debtor. They want to know that you can make your repayments on time and without issue, after all. But, if you’ve never borrowed before, they might consider you risky simply because they have no evidence to the contrary. When it comes to buying a house, setting up a business, or buying a car, having good credit is essential if you want to take out a loan. How do you build credit? By taking on debt, of course. Taking out a small debt that you know you can readily pay back is an effective way to start building your credit score, giving you a better chance of acquiring a loan when you really need it.

Of course, regardless of how positively you use it, debt has to be wielded carefully. You have to have a plan ready to put into action to start paying it back. So long as you are responsible, however, there’s no reason that debt can’t occasionally help you out of a jam.

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