1. Student loan: Good
A student loan is furthering your education and allowing you to become a professional in a field that you are passionate about. Taking loans for educational reasons is not a bad idea and is the only way many college students are able to afford a college education. The loans are an investment and will lead to higher-paying jobs in the future. If you take student loans, be sure to only borrow the amount needed for your education and not extra funds for personal use.
2. Multiple credit card bills: Bad
Opening multiple credit cards is not only hard on your credit, but it’s bad for your money. Tracking and paying off multiple cards can be difficult, and it is easy to accidentally miss a payment or charge more than you intended. Having one credit card bill is one of the best ways to build good credit. By keeping the balance owed much lower than the maximum limit, you will build a good credit score without incurring a lot of debt. Remember that a credit card is considered a loan that must be repaid monthly, so it shouldn’t be considered free money.
3. Buying a car in your price range: Good
A car is a good investment and a positive way to build credit with a loan—as long as you can afford it. Buying a brand new car isn’t always the best idea, and the depreciation may not make it worthwhile. Purchasing a used car in good condition will allow you to take out a loan that you can afford and be able to pay back while still in college.
4. Luxury items: Bad
College is less about luxury and more about learning. It’s never a good idea to borrow money for that expensive vacation you’ve always dreamt of, or that car that will make everyone on campus jealous. Taking out loans that you can’t afford is going to be scary and stressful when the time comes to pay it all back.
5. Apartment you can’t afford: Bad
If you are living alone, there is no need for a two bedroom apartment. Taking out a loan for a rented space isn’t always wise, and it can add thousands of dollars on top of your student loan debt. If you are living in an apartment, a part-time job is the best way to pay for it. Loans for housing should be taken down the road, once you are ready to invest in a mortgage.