When It’s OK to Be in Debt

Debt. A four-letter word everyone hates. I would love to shift that for you and help you to see that it could very well be the path to your financial freedom — if you use it wisely.

There are three times you can be in debt and not only be 100 percent guilt-free, but even grateful for the opportunity and the resources going into debt has provided for you.

1. You have a professional service you believe in fully and completely.

Whether you are a lawyer, an accountant, a hairstylist, an energy healer, a dog trainer, a therapist, or have any other kind of service to offer that you truly believe in, investing in building a business around that service is very likely the single best investment you can make in your future. Going into debt to make that investment is one of the best ways you can do it. Even before using savings, debt could be your best investment.

Start by gaining total clarity about who you serve best and how to talk to them, and create an engagement system that will bring your ideal clients into your office.

Then, create the business infrastructure to support your growth, such as legal, insurance, financial, and tax systems. Once that is in place, invest in growing a team that can operate your client attraction, engagement, and financial systems.

Finally, invest in your own personal growth so that as you come up against your own edges that could keep the business from succeeding, you keep moving ahead.

Each one of these investments will pay off many, many times over and you’ll not only be able to pay back the debt, but also make future investments with the returns.

2. You are ready to buy a business.

Perhaps you don’t have a professional service you believe in, but you still want to be in business for yourself. Using debt to acquire a business could be a great solution. Before you use debt to invest, make sure you have thoroughly investigated the business you want to purchase.  

Hire a business broker who can help you evaluate the deal, a great, creative lawyer who can support negotiations, and a tax accountant and/or estate planning lawyer who can support you to buy the business in the most tax-advantaged and asset-protected manner.

Finally, like the person investing in a professional practice, you will also want to invest in your own personal growth so you can keep the business moving in the direction you want it to go. Investing in yourself is important in this process — remember, you are worth it!

3. You are ready to educate yourself so you can offer a great service or run a great business.

If you do not have the foundation of knowledge you need to provide a great service or put your skills to work in support of a business that will support you in return, using debt to invest in your education is a worthwhile investment. I know firsthand that it can be scary.

I invested $100,000 to go to law school, and then another several hundred thousand dollars to learn how to build my law practice and businesses after that. And that’s just what I invested using debt. I invested another million dollars in mistakes I made along the way.

The good news is it’s all paid off. Sure, there have been times I wasn’t sure it ever would be and I thought maybe I’d end up a bankrupt failure who contributed nothing to the world (that’s where the personal growth investments really paid off, because I kept going anyway!), but in the end it’s all been worth it. And while not all the debt got paid back (I did file bankruptcy once), I not only survived, I thrived, and I’ve definitely contributed far more to the world than I have taken out in the form of debt.

I’ve lived through it to be able to say to you that you are your best investment. There’s really nothing to be afraid of when it comes to debt, other than not allowing yourself, because of guilt or fear, to tap into all the resources that enable you to be of highest service in the world. Get wise counsel, make smart investments, and always learn from your mistakes.

Ali Neely is a member of the DailyWorth Connect program. Read more about the program here.

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