For years, personal finance advice has revolved around one core idea that one should avoid debt at all costs. Pay off loans early, stay away from credit cards, and aim to become completely debt-free, many would suggest even today.
In line with the long-held belief, Certified Financial Planner Ravi Kiran Monigari challenged the idea that all debt is inherently bad. In a detailed LinkedIn post, Monigari argued that treating debt as a one-size-fits-all problem can actually hinder wealth creation rather than support it.
Probably, his views would be endorsed by many today as in some cases, avoiding debt entirely or rushing to close loans may even slow down wealth creation.
“In personal finance conversations, debt gets treated like it’s universally bad. Pay off everything. Be debt-free. Cut up the credit cards. It’s well-intentioned advice. It’s also incomplete,” he wrote, highlighting how common financial advice often misses nuance.
Good debt vs bad debt: A crucial distinction
Drawing from years of reviewing client balance sheets, Monigari stressed that not all debt carries the same financial weight. “There’s a meaningful difference between debt that costs you 18% on a credit card balance you’re rolling over, and a home loan at 8.5%… One is destructive. The other is a tool,” he explained.
He added that what truly matters is not the presence of debt, but its structure and cost. “What matters isn’t the presence of debt; it’s the cost, the purpose, and the structure,” he noted, urging individuals to evaluate financial decisions more strategically rather than emotionally.
Emotion vs data: The real financial battle
Monigari also pointed to the role emotions play in shaping money decisions. “I’ve watched people aggressively prepay a 7% home loan while earning 3.5% on their savings account… The math doesn’t support the decision. But the emotion… overrides everything,” he said.
He further emphasised the importance of weighing trade-offs: “The better question is always: what is this debt costing me, and what is the opportunity cost of paying it off early?”
The post sparked wider discussion online, with one user adding, “Unless we do consider taking decisions based on data rather than emotions, nothing will change in our lives.”
The conversation reflects a broader shift in personal finance thinking—moving away from rigid rules toward a more balanced approach. As Monigari summed up, “Finance isn’t about rules. It’s about trade-offs.”
But here’s the other side
While the argument makes financial sense, it’s equally important to look at the practical realities most individuals face.
For many households, debt is not just a mathematical decision — it’s emotional and behavioural.
Cash flow certainty matters: EMIs are fixed obligations.
In uncertain income situations, reducing debt can provide stability and reduce financial stress.
Investment discipline is not guaranteed: The idea of investing instead of prepaying only works if the individual actually invests consistently and wisely. Many don’t.
Market returns are not assured: Unlike loan interest, which is fixed, returns from equity investments can be volatile, especially in the short to medium term.
Risk appetite differs: Not everyone is comfortable carrying debt while investing in market-linked products.
Finding the balance
The takeaway isn’t that debt is good or bad. It’s that financial decisions should not be driven by rigid rules.
A balanced approach could look like this – prioritise clearing high-interest debt quickly, maintain adequate emergency savings, evaluate whether investing can realistically generate better post-tax returns than your loan interest and consider partial prepayments instead of going all-in.
Ultimately, personal finance is less about following fixed formulas and more about understanding trade-offs.
Being completely debt-free may feel safe, but using debt wisely, while staying financially disciplined, can sometimes be the smarter path to long-term wealth.
Ravi Kiran Monigari is also the co-founder of Vaaradhi Finserv LLP.
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