Why you Shouldn’t Borrow to Buy a Depreciating Asset

You shouldn’t borrow to buy something that depreciates in value. Examples that can depreciate in value are cars, electronics, jewelry, and much more. A reason why buying these is not good is because it produces debt. And debt, when for something that depreciates, is very bad.

One reason you shouldn’t borrow to buy something that depreciates is that what you buy should return an investment to you. Like buying a share in a company, it should return the equivalent of the value you paid for it or more. You expect the company you invested in to generate money for you. The same is not expected of a luxury TV, or of a sports car that you don’t need. Therefore, I think that borrowing to buy something which depreciates in value is not a good idea.

Another reason why you shouldn’t specifically borrow to buy it is that debt produces interest. And if you have a lot of debt over a long period of time, it can cause you a lot of trouble. An example is when you buy an overly expensive car. You don’t have enough money to pay it back, but you leave it be. “It doesn’t matter”. But then, after a while, it is getting impossible to pay the debt off. You rush to sell the car, but you realize that the car is not worth half as much as before.

In conclusion, I think borrowing to buy a depreciating asset is a bad idea. Borrowing to buy that video game you want, or getting that really cool car that you can’t afford are all not good. Debt can grow really fast.

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