Debt is one of the scariest words that frighten most of the individuals. Generally I have noticed that most of the engineers have at least one loan, the common loans that they take are, educational loan, personal loan, car loan or home loan. There are many packages generally for engineers so that they can pay the banks EMI easily. It does not look like a burden but if you analyze it is. Debt is not a bad thing according to me. We need not be scared of debts. The nation takes debt to improve the situation of the people and in turn make money to survive.
If you take debt then just ensure that you put money in some investment where in you get some money from the investment so that you can easily pay the loan’s EMI. It is a good habit to invest and also pay the interest to the bank. I have seen many people take personal loans and invest in stocks. Generally these traders (I don’t prefer to call them investors) take loans when a big company is going for IPO and subscribe for the shares and if it is allotted to them, they sell it after a week or two and get their money back and if things go as per their expectation then they make descent money and they repay back the money to the bank.
I do like this kind of thing. It makes sense; I agree that it is risky but the fact remains that they are not paying anything from their own pockets. They are making money and paying the bank’s interest from the profit that they are making. This is a good way to do things. It needs guts to do such a thing. If things go wrong then you are in a deep trouble. To ensure you are not in trouble, you have to do enough analysis before committing to any loans for investment.
Debts are not in general bad, I have read many articles and everyone says that it is a bad thing to have debt. I don’t agree with it. If it was so then why do the governments borrow money? Debts become bad when you don’t do good things with it. For example if you buy an iPod with the loan money instead of investing in government bond then I would say it’s bad else it is good. You are actually making more money. If you know how to count numbers, and do simple calculations such as addition and subtraction then I guess you can master the art of managing money. It is very simple. You have to dedicate some time. That is it.
Debts are in general a good thing. There are good debts and bad debts. If you utilize the debt money to make more money then it is a good debt else bad. People don’t think about this and they put the money in the wrong place and then crib about the situation they are in. I know it does not make sense to talk about it when they are wrong. If you want to make money then I think it needs some capital as seed and to get that debt can be used as a means. I don’t know whether you agree with me or not but that is just the way I see things as.
Engineer's Finance 