The financial expert gives tips on how you can benefit: How does borrowing the right way work?

But Kehl also says debt doesn’t always have to be bad. On the contrary: Anyone who has the opportunity to think carefully about where and why he will get into debt can actually benefit from it in the future. It explains how it works and explains which debts are good or bad.

Debt as investment

Depending on the goal, you may view borrowing as an investment in your own future, according to Kehl. “If you earn more in business in the long run, taking out a loan for education may be beneficial.” When it comes to real estate, it can also be beneficial to borrow money as its value often increases over time.

“It’s important to always calculate how and in what time frame you can pay off your debt,” says Kehl. These calculations are always associated with uncertainty regarding future (unforeseen) developments. In any case, it is important to pay off the debt quickly: “The longer the repayment period, the higher the cost of interest.”

Consumer debt is bad debt

Kehl says the majority of all debt comes from consumer debt. “A new car, a bigger TV or a beach holiday with the whole family is often tempting.” According to Kehl, it’s not a good idea to take out a loan or overuse your credit card: “In most cases, it doesn’t pay off.” Conversely, if interest rates are in the double-digit range (as they are with many credit card providers), you run the risk of paying even less in the future. His conclusion: “Consumer debt is, in most cases, bad debt.”

Besides deciding whether you’ll be able to pay off your debt in the near future, the important question is where and under what circumstances you’ll get into debt, Kehl says. Because high interest rates are costly in the long run, even for a small loan amount. “And anyone who takes out different loans for different expenses runs the risk of losing track of their debts.”

According to the financial expert in such cases, it will always be useful to clearly list all available loans and keep an eye on them. This ensures that debts are optimized. “There is also the possibility of consolidation or restructuring of individual debts, depending on the bank.” You need to find out from the relevant banking provider whether this is possible. In the best-case scenario, unnecessary losses can be avoided, according to Kehl.