Q: What are the right and wrong ways to use debt?

A: Debt can be a powerful tool for building your financial future—but only when used with intention. Used poorly, it can damage your finances and add unnecessary stress.

Here are a few ways to make debt work for you, not against you:
• Use debt when it provides a clear return.
For example, borrowing against investments or long-term savings that earn more than the interest rate.
• Borrow for meaningful goals—not fleeting wants.
Good examples include a primary home, education, or proactive health care. Riskier uses: dining takeout habits, unused subscriptions, or short-term entertainment.
• Keep interest rates competitive.
Aim for rates close to today’s mortgage prime rate. Avoid “high-cost” debt—generally anything above 10%. Tax-deductible interest (like mortgage interest) further lowers your true cost.
• Always borrow with a repayment plan.
Even 0% offers can backfire if you don’t know how—and when—you’ll pay them off.
▸ Rule of thumb: Don’t stretch payments longer than the benefit you receive from the purchase.
For example, 5-year debt for a 5-day vacation probably isn’t a good idea.Bottom line: Debt isn’t good or bad—it’s a tool. When used with purpose, limits, and a plan, it can support your goals instead of derailing them!