I used to be afraid of debt. Now I understand how to use it to my advantage


I was super lucky to sidestep the burden of student loans. Thank you, scholarship! I’m getting to the age where a few people are starting to clear their student debt, but I’d say the majority are still paying theirs back.

I’ve always been debt averse. I’ve never really bought anything I couldn’t afford, and have avoided going into consumer debt.

(Granted, I have carried a balance on my credit card during some of the super fun times of unemployment and being down to one income. Paying that interest sucked – they were small balances of a couple grand but still. That shit stressed me out.)

Using debt to get ahead

We paid for all our cars in cash. But unfortunately that never turned out too well for us, because we couldn’t afford very good vehicles.

For this car I took out a loan and paid it down aggressively, eventually pulling from savings to pay it off  in full 9 months in. This saved so much stress and at the end of it we have a reliable paid off car that should have years left in it (touch wood).

And after years of enduring substandard NZ rentals, I have bought a house of my own and am already enjoying the benefits. The peace of mind that comes with the stability of owning is priceless; I am finally able to own a dog; and I’ve noticed my health is better now I have a warmer, drier home environment. This means I can be more productive – not to mention be taken more seriously as a professional when I don’t have a constantly literally dripping nose through winter and sniffles year round.

I don’t expect interest rates to stay this low so I’m directing extra money to the mortgage where I can – early repayments at this stage have a massive impact on the long term total cost.  Reaching retirement with a paid-off home will be a big win.

Going into debt as a calculated move has been one of the best things I’ve ever done. I’d probably be better off had I done so sooner.

Debt is debt and I still hate it – but money is a tool and debt can be too, done right.

In an ideal world nobody would ever need to borrow money (and we’d have 0% unemployment, poverty, homelessness etc…).

Sadly, that’s not the world we live in – and if we do need to borrow money then the key is to do it wisely.

10 thoughts on “I used to be afraid of debt. Now I understand how to use it to my advantage

  • Reply Mr Crazy Kicks July 29, 2016 at 03:45

    We do still have debt, a mortgage. We chose to invest rather then pay off our debt. What we have earned in gains and dividends has paid us more than we pay on our debt. But it’s also riskier.

    Good luck with your new home!

  • Reply Taylor Lee @ Yuppie Millennial July 29, 2016 at 04:50

    Pretty much how I feel about debt. Still don’t love it but it is a very powerful tool if used correctly.

  • Reply Martin - Get FIRE'd asap July 29, 2016 at 10:52

    Good point nz muse. Debt, to the personal finance community, is generally considered to be taboo but sometimes it is necessary, especially when buying a house. I doubt that there are many of us who could afford to pay cash for a property especially in NZ.

    As you say, it’s all about using debt wisely and certainly not for things that can wait such as bigger TV’s, holidays, and recreation toys.

    I’m pleased to hear that you moved out of a sub-standard rental. Poorly insulated, leaky houses are not where you want to be during a NZ winter. I’ve been there and done that.

  • Reply Life We Learn July 29, 2016 at 15:52

    We have a mortgage and have no regrets whatsoever about going into debt to buy a house. You sometimes can’t put a price on security, piece of mind and a place to call home permanently. As long as you borrow within your means, then it’s fine imho.

  • Reply Dividends Down Under July 29, 2016 at 16:59

    Tristan and I have always said we won’t go into debt except for a mortgage. Currently we aren’t planning to buy a house at least for 5 years (want to get IVF babies/huge IVF expenses out of the way first).

    I must admit, until I read your linked article about why you financed your car I did question why – my mindset was “why not wait 9 months to buy it, instead of paying it off in 9 months”, if you really had to replace it for safety/it was as dead as a doornail, I can see why you did. Though I think a lot of people finance cars because they’re too impatient to wait the 1-2 years it would take to save up the money.


  • Reply DC @ Young Adult Money July 29, 2016 at 22:36

    This is so great! There are so many people out there who are afraid to leverage debt. I have a less than 3% interest rate on two auto loans and a 30 year mortgage at 3.25%. There is no way I will put another dime towards those debts than I’m required to. All extra money will go straight towards saving and investing.

  • Reply Jayson @ Monster Piggy Bank July 31, 2016 at 12:39

    Debt is really a challenge. I think it’s completely fine to have some debt but it should be minimal and manageable. That said, I try as much as possible not to be in the rut of debt.

  • Reply J @ Hey It's Just Money! July 31, 2016 at 16:03

    My partner and I are both debt averse but I’m willing to take a risk on taking a mortgage out soon and he isn’t. He wants to wait ‘for the market to crash’ before we buy a house. I don’t agree with this but he has the money for a deposit and I don’t. This frustrates me sometimes but I’m trying my best to be patient and explain it better to him. Our RSPCA visit might have softened his mortgage-cold heart though. Ha! We honestly would’ve enquired for adoption if we owned our house.

  • Reply Elsie @ Gundomoney August 1, 2016 at 15:17

    There’s a reason loans exist– they give us the ability to access things now that we’d have to wait for in the future. I think taking on debt can be great if it helps us get to a goal faster or achieve something we never could have just saving up the money.

    A good example would be taking out a business loan. It allows you to start something super expensive, and if your business does well you have no problem paying off the loan. You get to take advantage of that 5 years you would’ve spent saving. I think we need to let go of an “all good” or “all bad” mentality when we look at financial issues. The truth is somewhere in the middle.

  • Reply Athena August 2, 2016 at 16:02

    I am so happy for you that you bought a home in the crazy NZ market. Sure, going into debt is never ideal but you are going to have it paid off and you are not paying someone else’s mortgage to boot.

    Since graduating this past spring, I am looking at a $50,000 student loan debt in the face. It’s not ideal but I am happy I went back to school and finished my bachelors. It’s amazing how different I am treated now at work because of it and how my criminology background has already opened some doors for me.

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