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Let’s talk game plan: Is your goal to lower debt to zero? Is it to eliminate it and be “debt free”?

If so, then you join many others who feel the same way. This thinking is “what’s in” right now.

You are probably hearing all of the same commercials I’m hearing, where the promise of “living with freedom” is at hand, all you have to do is call this 800 number.

You want my perspective?

I think that it is commendable to have such a goal.

Just be careful.

Don’t fall into the trap of believing everything that’s promised…remember, if it sounds to good to be true, it’s probably not.

Don’t get me wrong, though, there are plenty of services out there that do a great job in helping people lower debt - just do your homework: get references, check the Better Business Bureau website , check what it’ll do to your credit, etc.

These services are geared for folks who are having financial difficulty and need a third party to help them lower debt. Now, ask yourself: Are you addicted to debt? Be honest with yourself - if you are, these services (as well as those offering counseling) are for you.

If you are not, then check this out:

Debt can be very beneficial for your financial life.

Huh?

You heard me.

But before you start calling me names, think of the following two extremes.

One extreme is Jane.

Jane just loads up on debt, can’t get enough of it. She loves to shop “till she drops”, but never pays anything off.

She wants to lower debt but does not do anything about it.

What happens with Jane in the long run?

Easy, horrible credit, financial collapse, bankruptcy, you name it.

Now, here’s the other extreme: Mary.

Mary hates debt. The only debt she has is the mortgage on her house and her student loan. She is on an accelerated payment on both plus pays extra to “hit principal”.

Her desire is to lower debt to zero or “kill” this debt even if it means she can’t afford to enjoy anything for now.

What happens with Mary in the long run?

This one is more difficult, because Mary may end up being “debt free” and achieve her goal, but at what expense?

She did not enjoy her life because she was waiting to pay everything off. Also, how about if she lost her job in the process?

She probably did not have any emergency funds saved up for a rainy day.

Since she didn’t believe in debt, she would not have the luxury of having a credit card help her out through the difficult times.

Actually, because she was so fixated on paying everything off, she didn’t bother to save or invest either, so she missed out on the benefits of compound interest. My point?

You need to look at debt as a key part of your financial strategy rather than something that’s so bad that you have to “kill” it.

Instead of hurting you financially, it can help you with the cash flow you need for long term wealth.

It gives you the flexibility to take advantage of opportunities such as buying a home, getting an education, and or building a business.

Yes, when debt is not handled properly, it’s destructive. You must figure out how much debt you can have so that you don’t financially flop.

When you need to consolidate credit cards and or lower debt in general- you should.

However, understand that debt is just a financial tool that’s virtually necessary for building wealth and reaching your financial goals.

So what’s the key? Strive to manage your debt, rather than eliminating it. It’s a smart move in your quest to win the game.