By Anthony Ngatia
The price tag on elective political posts in the coming polls is set to be the highest.
With such premium, temptation to do everything to win is high. Some aspirants will spend all their lifetime earnings on campaigns.
Borrowing will be unavoidable item for others willing to mount well-oiled campaigns. But is it worthy to go into debts to spend on campaigns? Yes, borrowing to invest is a wise idea, but it is still an issue seen as quite controversial by many.
Financial experts say it is right for one to consider what they are borrowing for. The good versus bad debt is probably what most advisers dwell. But again, it falls short of specifics.
Good debt, we are told, is that which you channel to an income generating activity, acquire an asset that will earn income like a flat as well as increase your networth.
It is a debt, which you channel to improving human capital or education.
The use of cheap or low interest loans by business people to buy properties in prime locations, build houses, or increase their stocks, which will certainly increase in value over time, is a common practice today.
Personal finance experts consider this as a form of leveraging — literally ‘taking advantage of’.
Bad debt, we are advised, is for doing things that will not increase in value but are consumptive in nature. They include going for a holiday, shopping, buying a luxury car, gambling and financing ceremonies like weddings. This kind of debt should be avoided like plague!