What are bad debts? Well, refer to a previous entry on what I’d consider as a bad debt. Basically, when you take out a loan to purchase things that has no ability to yield anything towards your wealth-making journey, then that’s a bad debt. That’s my interpretation anyway.
Anyway, think about this situation. How about if you take out a loan to further your studies or skills? Would you consider that as a bad debt?
Now, let’s put a spin to that scenario. How about if you already have other qualifications and you are already working? Would the loan then qualify as a bad debt? For example, you already have a Bachelor’s degree in Finance and you’d like to fund your MBA studies through study loans. What do you guys think?
Reason I’m asking is this. As a lot of you might already know, I want to become a pilot. Unless an airline can take me on, the only way I can become one is by funding the training myself.
If I stay here in Australia, I can work (assuming somebody will actually hire me) and pay my flight training on an ad-hoc basis. If I return to Malaysia however, I need to train on a full-time basis, thus coming to the need of having a huge lump sum to fund the training. The only way to get that huge sum of money is through financing. Now the million-dollar question is, am I willing to include a RM250,000 long-term loan on my balance sheet?
Oh, by the way, ditching the flying bug is definitely not an option that I’ll ever consider.
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Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.
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