There is a good chance that everyone in the UK will have to take on some debt in their lifetime. Whether it be for a car or for a place to live, you will need to borrow some money. But, especially at young ages, debt should be avoided at all costs. When is it really too soon to go into debt?
The general consensus on this subject is to not take on any debt until you absolutely have to. What exactly does this mean, though?
If you are 19 years old, you don’t need a brand new car that costs a lot of money. You can get away with saving for a while and paying cash for a used car. Sure, it may not look as nice, but being debt free is more than enough to make up for it.
There is an exception to this rule though – houses and condos. You see, you have to live somewhere when you move out of your parent’s house. When you are renting a place, you are effectively throwing money away – you are not building and equity. So, as soon as you can afford it, you should consider taking out a home loan and buying your own place. This way, you are building up your assets and not throwing money away.
With the exception of a home, you want to stay out of debt for as long as possible. As soon as you start acquiring debt, it usually starts to snowball out of control and will cause problems down the road.