Debt and Family

Sensible Borrowing - Silly Borrowing
There is a world of difference between a home mortgage and a revolving credit card balance. Both are debts for which the borrower is responsible, but the first debt of the home mortgage is a sound debt, while the latter debt of the credit card is a stupid debt.

(a) Sensible Borrowing

" Sensible borrowing involves a level of limited risk ..."

Sensible borrowing involves a level of limited risk for the lender, as well as the borrower, so both have comfort in the transaction.

Sensible borrowing looks like this:

  1. Secured - The debt is secured. The lender holds a charge or security for the amount of the loan - this is known as collateral.
  2. Safety - The borrower has a safety valve: The borrower has other ...

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