Are you debt-neutral, debt-averse, or “debt-particular?”

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Most of us have financial goals we’d like to achieve, whether that’s owning a home, earning a certain salary, or having a set amount of investments and passive income. We may even desire to become debt-free. When it comes to debt, most people fall into 1 of 3 categories: Debt-Neutral, Debt-Averse, or Debt-Particular.  


Debt-Neutral is the category used to describe people who lack strong feelings about debt. I don’t think anyone likes debt, but some people may simply feel indifferent to it. Perhaps they view debt as a way to make things more convenient and use it to purchase things they wouldn’t ordinarily be able to buy.

Unfortunately, being debt-neutral, especially when it comes to consumer debt, can get us into trouble. Borrowing money to purchase things, especially items that decrease in value over time (like cars, clothes, and electronics), can can lead to bad habits that lower our net worth. While credit cards, equity loans, and financing deals can make things more affordable in the short-term, they often end up costing us more overall, especially when we consider the interest that is added.


Debt-Averse is the category used to describe people who hate debt. This category is usually full of young professionals who took out student loans or racked up credit card debt early in life. Now they may be in the repayment phase and likely loathe every second of it. They realize that the more debt payments they have, the less money they can use to save and invest the way they would prefer.

People who are debt-averse are usually “in tune” with their finances and have a budget or spending plan that allows them to pay off their credit cards, student loans, and auto loans by a certain date. They may even be hesitant to get a mortgage. While this may sound aggressive, it has several advantages. Being eager to pay down debt, will help you save money over time since you won’t have as many loans to repay. Plus, it also changes your spending habits and mindset. The process of paying off debt is a long-standing practice of frugality that makes you less materialistic and teaches you to live below your means. When you no longer have debt to pay back, you can be a lot more selective in the jobs you take, number of hours you work, and quality of life you live.


Too much of anything can be detrimental, so people in this group attempt to use debt to their advantage. They are usually experienced investors who know better than to purchase liabilities (things that decrease in value) with borrowed money, but may feel differently about assets. Instead of being indifferent to consumer debt or living a life of frugality to pay off their loans in record time, they have a different philosophy: use debt to increase your net worth by borrowing money to purchase things that increase in value over time.

Instead of simply paying off debt, they focus more on increasing their income. Many people in this group have read some investment guide or come across Robert Kiyosaki’s “Rich Dad, Poor Dad” and realized that purchasing assets is one of the ways the rich get richer. They may have even considered taking out loans to purchase real estate or invest in a business that could increase in value and create an additional revenue stream.

My point: There are 3 groups of people when it comes to debt. Those who are debt-neutral and have a decent amount of consumer debt with no realistic timeframe on when they will pay it back. Those who are debt-averse and have an aggressive plan to pay back their debt in record time. Lastly, those who are what I call “debt-particular.” They avoid bad debt (by not borrowing money to purchase things like cars clothes and electronics that decrease in value), but don’t mind good debt (taking out loans to invest in assets like real estate or businesses that may increase in value overtime or provide an additional revenue stream.

Which group do you think you are in?