As Canadians, we all know that debt is a fact of life. Whether it’s a mortgage, car loan, or credit card debt, most of us have some form of debt. While it’s easy to see debt as a negative thing, it can actually play a positive role in your financial planning.

Debt can be a powerful tool to help you achieve your goals. By borrowing money, you can invest in assets such as a home or education, which can increase in value over time. But it’s important to manage your debt wisely and avoid taking on more than you can handle.

Here are some things to keep in mind when it comes to debt and financial planning:

  1. Understand the different types of debt: There are two main types of debt: good debt and bad debt. Good debt is used to invest in assets that can appreciate in value, such as a home or education. Bad debt, on the other hand, is used to purchase things that lose value over time, such as a car or consumer goods. It’s important to understand the difference between these two types of debt and to avoid taking on too much bad debt.
  2. Manage your debt wisely: It’s important to manage your debt wisely by making your payments on time and avoiding taking on too much debt. One rule of thumb is to keep your debt-to-income ratio below 36%, which means that your monthly debt payments should be less than 36% of your monthly income.
  3. Have a plan to pay off your debt: While debt can be a powerful tool, it’s important to have a plan to pay it off. Make a budget and prioritize your debt payments. Consider paying off high-interest debt first, such as credit card debt, and then focus on paying down your other debt.
  4. Use debt to achieve your goals: Debt can be a powerful tool to help you achieve your goals, whether it’s buying a home, starting a business, or pursuing education. But it’s important to use debt wisely and to avoid taking on more than you can handle.
  5. Seek professional advice: If you’re struggling with debt or have questions about how to manage your debt, it’s a good idea to seek professional advice. A financial advisor can help you develop a plan to manage your debt and achieve your financial goals.

In conclusion, debt can be a powerful tool to help you achieve your financial goals, but it’s important to manage it wisely. By understanding the different types of debt, managing your debt wisely, having a plan to pay it off, using debt to achieve your goals, and seeking professional advice, you can make debt work for you and not against you.