Debt-Worthy or Save Up?

No one wants to see their bank account drained, so our finance expert Rubina Ahmed-Haq is helping us understand when to go into debt for something, and when to save up for a privilege.

Debt-Worthy or Save Up?

Vacation

Rubina says: Save up!

Treat holidays like your boss would treat vacations days: you have to earn it to you use it. Unless you have the money in the bank don't book a vacation. A vacation is a luxury expense and you should never go into debt for a luxury, as they're worth nothing after the experience is over.

Start a business

Rubina says: Debt-worthy!

Starting a business takes some guts. If you have a good idea and have done you research, then go ahead and spend the money to start your business. But make sure to secure the right loan because 50 percent of businesses fail in their first year and 90 percent by the second year.

Having a baby

Rubina says: Save up!

Babies cause a lot of strain in a relationship as your life changes dramatically after this little person enters your life. Don't exacerbate it with money issues. Your fist baby will cost you close to $10,000.

Buying a sports car

Rubina says: Save up!

A car is a depreciating asset. A new car loses 20 percent of its value the minute you drive it off the lot. Unlike a home, a car becomes cheaper as it gets older, the cost to maintain it rises and new, more attractive, models come out that are technologically more advanced and attractive to buyers.

Higher education

Rubina says: Debt-worthy!

A college education will better your chances of getting a higher paying job. A college graduate is likely to make one million dollars more in their lifetime than a high school graduate. Even with tuition costs rising a college education is worth it. Employers see college graduates as more valuable and trust them in more senior roles.

Wedding

Rubina says: Save up!

Don't start your life together in debt. Money is one of the top five reasons couples fight. By starting your life together in debt you might be setting yourself up for disaster. The wedding is one day, the marriage is forever.

The average wedding costs $30,000. The wedding business is a thriving one, because couples are often charged a premium for their hall, their dresses and tuxedos and the food. Be aware of the premium prices you'll be paying just by saying the word wedding.

Rubina Ahmed-Haq with Steven and Chris

 

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