Having debt does not always entail negative outcome.
As a matter of fact, loans can help you in achieving your financial goals.
You just need to manage your finances well.
It is almost impossible for an average citizen to buy a home in cash.
Though you may have to pay a portion in cash, you still have to borrow to pay for the entire amount.
But of course the more you pay in cash, the less you will have to borrow with a shorter time needed to pay off your loan.
Rational thinking leads you to decide on exhausting up your available resources to lessen your debt and avail of lower interest rates, but practicality says don't do this.
Never take for granted other relevant concerns such as investments and emergencies.
In addition, don't deplete all your money in buying a home, instead consider your other debts.
When it comes to interest, mortgage banks offer lower rates than other debts and you take away the interest on the first $1 million of a mortgage loan.
Use your cash in other items instead.
In the event that your mortgage bears a higher rate, you can refinance later once the rates go down.
Buyers usually get the best mortgage deals when they pay the traditional 20 percent of the home's total contract price.
But some buyers still put down as low as 3 percent ending up getting a higher monthly mortgage installment plus the primary mortgage insurance - that protects the bank in case of failure to pay.
Paying for a college education is another issue that takes borrowing to another level.
Having your children take loans or look for college scholarships is better than using up your reserve funds or borrowing from your home or against your retirement fund.
You have to leave some funds available in case of emergencies.
You may also be risking losing your home, in case of financial difficulties.
Also, you have to secure your retirement - the age of when a person stops employment completely.
Another thing, retirement savings are not counted as liquid assets and will not be counted against you in case of financial aid application.
Ideally, plan and budget your kids' educations so as to not compromise your other financial needs.
Whatever amount that will not be covered by your savings should be taken care of by your kids.
They can avail of Perkins or Stafford loans which are supported by the government, have lower rates, with payments due until after graduation.
And in some cases, the interest paid is tax-deductible.
The best measurement of a car financing decision is your decision on how long you will keep it and how much cash you have.
This is because car value is the fastest item to depreciate.
You may examine your finances and potential investment that you want to put your money into.
It is better to pay in cash if you intend to keep the car for a long time or if there is no better investment deal available to put your cash into.
However, most consumers can't pay outright cash.
But paying down a larger amount without damaging your emergency fund or your financial objectives is a better decision.
It is usual practice for lenders to take at least 10 percent as down payment.
It is a good loan, if you intend to use your car long after you have paid down the entire car loan.
At times you will be tempted to use your home equity loan to buy a car because of the tax-deductible and lower interest rate compared to having an auto loan.
But you have to be careful and must ensure never to default.
Your home is far more important than the car.
If you don't intend to keep the car that long, you don't have 10 to 20 percent in down payment, you drive less than 15,000 miles a year and you are very keen in keeping your vehicle in good condition, then, you may choose to lease a car instead.
There are several options to choose from, review the offerings and get the best deals.
Be careful to examine how much you are going to pay in full, not only the monthly dues.
You may be able to get a new car for $400 a month based on an uncompetitive interest rate, if you told the dealer you can pay that amount.