What is your first impression when you hear the word ‘debt’? Not infrequently people immediately give bad connotations, debt is always synonymous with something harmful, making people wasteful, something that ensnares humans in a vicious circle and can never be free. But you know, that debt is not always bad. If used more wisely, debt can actually be the first step that leads you to be more successful with the income earned, the debt is referred to as productive debt. Whereas, if all this time you have assumed that debt is bad because it makes people become so-called debts as consumptive debt. To find out more, let’s discuss the difference between productive debt and consumer debt:
This debt means debt whose value always grows over time. This type of debt helps you to make money and help to invest. This debt is usually used to meet needs and not for mere fun. Examples of this type of debt, for example, make payments online to take online certification / online courses using a credit card, buy property with a mortgage loan, or apply for loans to banks in the form of KTA to develop a business. (Read also: Want to Use Bank Loans to Grow Your Business?).
All debts mentioned above can be used as investments, right? When you do a property loan, when the unit is ready you can rent it to someone else, or resell it. Another case when applying for a KTA loan, when your business is more developed, the coffers can increase again.
As with productive debt, this debt is precisely the type of debt whose value decreases over time, because there is no value that can help you make money. The nature of this debt is more wasteful because it is used only for pleasure and desire. This debt can usually also arise due to peer pressure that requires someone to follow a certain lifestyle, so that they inevitably also have to shop for goods / services that are not really needed. For example, someone who buys a new smartphone because all of his friends have bought a new type out, even though the smartphone he has can still be used. There is no value that can grow from the purchase of the smartphone if its features cannot be used to increase income.
How about this?
For example, a graphic designer decided to buy a MacBook for 20 million rupiah with a credit card to support his work. He considers the features and specifications in the MacBook can make it more productive, increase income through freelance projects, and make it easier to make high-resolution images. Does it include productive or consumptive debt? Of course productive, because even if you buy with a credit card, he can generate more income and according to his needs.
There is one more case, for example, an accountant bought this MacBook. Is it immediately considered a consumptive debt? Not necessarily. It could be, he is an accountant who also has talent in the field of design, then the MacBook can be used for side jobs as a freelance designer, and can also be used to support his main work by installing accounting software . Of course the debt is directly calculated as productive debt. Another case if he only uses it to watch movies or just browsing . Of course there is no added value from the object, if this happens then the installments that are currently running automatically turn into debt that is consumptive.
Ways to Avoid Consumptive Debt
Of course you don’t want to get into this type of debt, right? People who have productive debt usually have additional income to pay the remaining debt installments. Whereas those who have consumptive debt tend to be more risky of being entangled in mounting debt deposits. Therefore, think first about what benefits can be obtained from goods / services before buying it. One thing that should not be missed is to see whether the item is written in the monthly budget, and the installment payment has already been calculated. Keep in mind that if you are unable to pay off a consumptive debt, you can get entangled and chased with soaring bills. So make sure every time you buy something, take into account carefully. (Read also: Using a Credit Card with More Precise). Instead of having to waste money to spree, it would be better if you save it, right? (Read also: Solutions for Frequent Spree and Little Savings).
Now you already understand the difference between the two, right? In conclusion, only you can determine the value of the goods / services you buy, if their use is not used properly and can provide more income, it certainly turns into something consumptive. If you can turn it into a field of income, it will turn into something productive. Don’t get caught up in consumptive debt! (Also read: This is the One Who Must Do When Debt )