Savings 2009 - Can Debt Still Be a Friend?

As the era of tight budgets and scraping just enough to save continues, the notion that debt is a positive thing may seem ridiculous to many - it should be avoided at all costs, and it certainly shouldn't be available to someone who is likely not to earn enough to pay it back.

Yet, if debt wasn't as available as it is - i.e. if it were capped, what would happen when we really needed it? Most of us are paid by the month, and if at some point you need to make an emergency payment, on your car, or on your property etc, acquiring the capital to pay immediately is an absolute life-saver - and if for some reason it wasn't accessible could be potentially disastrous.

Thankfully, huge emergency payments are few and far between, but seeing as I'm writing this as thousands of university students invest a good chunk of their student loan in a Fresher's Week binge (I know I did), student debt is certainly worth a mention. Tom Cockreill (quoted in The Guardian) has the following to say about this: "Society seems to be happy to let debt accumulation start at university. It's all the more dispiriting that higher education, the bedrock of future prosperity and a more secure society, is paid for via debt."

This is certainly a curious aspect of modern day living. But would further education be as open and equal as it is if the system were not run this way? And additionally, what better time is there in one's life to come to terms with such an expensive, and important, investment - when they are enthusiastic and ripe for learning?

That said, it seems that for people of all ages there is still room for learning how to contribute to making their society less indebted - and it is going to be more difficult for borrowers to simply borrow to much in the future.

Perhaps more transparency is owed to students regarding how much they are paying and borrowing for university - and how much their course and grades are really going to be worth in the future if they achieve the best they can do so. But for those who are borrowing for other products, i.e. desirables, capping may be a good idea - at least to ensure that we are as a society are in control of debt - and it is no longer in control of us.

Paul Roberts writes about banking, student finance and savings accounts and best savings rates.