Home > Managing Debt > Am I Too Old to Take On Debt?

Comments 0 Comments
Advertiser Disclosure


Taking on debt is always a leap of faith, no matter your age. But taking on debt when you are older should be handled even more carefully.

Similar to retirement investing advice, in general, the younger you are, the more risk you can take. You simply have more time to recover from any downturns.

Good Debt vs. Bad Debt

Discussion of debt is often broken into two kinds — good and bad. Bad debt carries high interest and goes to buy things that usually don’t have the ability to bring a return. Also, it is most often used to buy things that you don’t need and can’t really afford. Think about things like credit card debt taken on to go on a clothing shopping spree.

Good debt is usually something that you can’t pay for in cash all at once but that will pay off in some way and has lower interest. Some examples of good debt can be taking out a mortgage or a student loan, if you can afford the monthly payments.

Retirement & Home Loans

While many people aspire to pay off their mortgages before retirement, the financial reality has more and more heading into old age still making monthly payments. If you have already paid off a mortgage and are looking to move, before taking on a new home loan there are a few things to consider. Many of the same factors apply no matter what age you are — how long you plan to stay in the area, whether you can afford the down payment, what the taxes will be, how the monthly payment fits into your budget, etc.

When applying for a 30-year loan later in life, you may be looking at a reality where you will be passing that home (and the loan) onto your heirs when you die. You might need to consider life insurance policies that will cover the cost, so you aren’t passing on a burden. This is especially true if you are retired and no longer covered by an employer’s life insurance policy.

You may determine that you don’t require as big or as expensive a house in retirement. You may also have less flexibility in your budget because of a fixed income. If you still have a mortgage, you may consider downsizing to a less expensive home. If you’ve built up enough equity in your current home, you might even be able to sell and buy a cheaper home so you can live mortgage-free.

Middle Age & Student Loans

A career change in your 30s, 40s, 50s or beyond may require some additional education. There are certainly lots of factors that go into deciding to go back to school. But with the high cost of education, finances cannot be ignored. Even if you have the cash on hand to pay for that degree, it’s a good idea to consider if this is the best use of that money. And if you will be taking out student loans, it’s even more important to think about what return that degree will offer and whether it is really makes sense to go back to school.

Things to consider include what the monthly student loan payment will be, what job prospects will open up for you, how your salary potential will increase, etc. Then, of course, there are the more intangible things to take into account — how much you will enjoy it and how important expanding your knowledge is to you. Then there are other alternatives to look into — like auditing classes instead of getting a degree. Some schools have programs where senior citizens can audit classes for lower fees or even for free. It’s wise to consider all of your options.

Before taking on any debt, it’s important to make sure your credit score is in good shape so you can get the best interest rates possible. You can see two of your credit scores every month for free on Credit.com.

More Money-Saving Reads:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team