Is There Such A Thing As “Good Debt”?

It is one of several trending headlines in the business world as of late. It is a hot button topic for many people and unfortunately, it is festering into a problem we’ve never seen before. We are talking about the topic of debt.

Debt drives financial markets. It creates and generates cycles of growth and if not managed properly, can cause crises; like the one that occurred back in 2008. Our lives are, in one way or another, affected by debt and we want to address student loans specifically.

Tim Rostan (https://twitter.com/mrtgr) of Market Watch posted an intriguing piece from the Wall Street Journal on a man named Mike Meru who borrowed over $601,500 to finance his postgraduate education in dentistry. A substantial amount to borrow, even prior to considering the interest that will accrue on top of it. The graphic below gives an illustration of what his student loans look like.

Debt can be summarized as taking in the present what you plan to pay back in the future. This is not necessarily a bad thing, but when you can borrow money so freely, it can become a major burden if not properly managed. But due to easy access to credit, rising tuition prices and not to mention rising interest rates, are we starting to see a trend where potential borrowers are unable to pay back their debts?

 

THE CLEVER AFRICAN: INVEST IN YOU

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