How to Use Debt to Build Your Financial Future

NEW YORK, NY /ACCESS Newswire / August 28, 2025 /Debt can be a powerful financial tool if you use it carefully. For example, if you have a lot of high-interest debt, a personal loan for debt consolidation with a lower interest rate may save you hundreds or thousands of dollars down the line. Let 's take a closer look at how using debt wisely may help improve your current finances and build a stronger financial future.

Good debt vs. bad debt

Contrary to popular belief, not all debt is bad. In fact, good debt does exist. Typically, debt is considered good if it 's used to pay for something that could earn you income or increase in value over time. Bad debt is generally used for consumable items or those that quickly depreciate. For example, taking out a personal loan to go on a fancy vacation would likely be considered bad debt. However, if you use a loan to buy a home, that debt is considered good since you 'll own the asset once you pay the loan.

Tips to build wealth with debt

Here are several ways that strategically taking on debt can help steer you toward financial success.

Debt consolidation

If you 're overwhelmed with a lot of high-interest debt, a personal loan can help you roll all your debts into one loan account, with a single monthly payment and due date to keep track of. If the new loan has a lower interest rate than the rates you 're paying on your current debts, you could probably save a great deal of money on interest every month. However, keep in mind that if you have a longer repayment term than before, you could actually wind up paying more interest over time. But the benefit of making a single, potentially smaller payment every month may be worth it.

Home renovations

Not all home improvements are created equal. However, many can increase home value and offer a return on the investment. If you don 't have the cash on hand to renovate your home, a personal loan might be worth exploring. The top renovations that boost home value include kitchen remodels, garage door replacements, new siding, deck additions and installing stone veneer.

Educational purposes

Have you always wanted to learn to do taxes, cook or build a website? If so, you can take classes online or in person at a local college or trade school. A personal loan may help you cover tuition, which may lead to new knowledge and even a side gig or new job opportunity that has the potential to increase your income.

Rental investments

Wisely managed fix-and-flips or long-term buy-and-hold rental investments can be great wealth-building tools. If you consider yourself handy and find a great deal on a property, taking out debt with a first or second mortgage can provide you with the cash you need to get started with real estate investing. Just make sure you do the math and feel confident your investment will likely generate profits, or that you have the money to cover the mortgage payment until you can start collecting rental income.

Emergency expenses

Surprise expenses can pop up when you least expect them. If you have a retirement or brokerage account, it may be tempting to tap those in order to raise quick cash. A personal loan may be a cost-effective way to cover an emergency without compromising the long-term growth of your investments.

Use debt wisely

Debt can be a valuable wealth-building tool if you use the right type of debt for the right reason and manage it responsibly. When in doubt, consult with a financial advisor who can help you run the numbers to determine if taking on debt could have a net positive benefit for your financial future.

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SOURCE: OneMain Financial

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