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Most people have been taught that certain kinds of debt are “good,” and that others are “bad.” But debt doesn’t always fit into neat categories. Take a look at some misconceptions about good debt vs. bad debt, and use the facts to get a better handle on your finances. You can consider this your personal debt payoff planner.

Good debt misconceptions

Myth: Putting a 20% down payment on a mortgage is always a wise move.

Fact: Buying a house can be a good investment, especially if the value of your home outpaces inflation. But while there are advantages to putting 20% down on a mortgage, saving that much dough isn’t always easy. Putting less down allows you to tackle important short-term goals like paying off student loan debt, and make headway on long-term goals such as saving for retirement. Consider this: In 2019, the median down payment for a home was 12% , according to the National Association of REALTORS®. (And with SoFi, qualifying borrowers may qualify for a mortgage with as little as 5% down.)

Tip: Get your mortgage rate in just two minutes. If you already have a mortgage, refinance for a lower rate. You might be surprised how much you can save. Currently, mortgage interest rates are at historically low levels. The average interest rate for a 30-year fixed rate mortgage was 3.230% in March 2020. Refinancing could allow qualifying borrowers to secure a lower interest rate on their mortgage.

Myth: High-interest student loans are a fact of life.

Fact: Yes, student loans allow you to get the education you need to secure the career you want, but that doesn’t mean you have to stick with the terms you were initially given. After you graduate, you can refinance your student loan to secure a lower interest rate and save money over the life of the loan.

Note that relief bills for the COVID-19 pandemic have extended borrower protections like the suspension of federal student loan payments and 0% interest rates through Sept. 2021 . Refinancing federal loans would eliminate them from these protections.

Myth: Student loans take at least 10 to 20 years to pay off.

Fact: With a little discipline, it’s possible to pay off student loans before you’re old and gray. Borrowers have the option to pay more than the minimum due. It’s amazing how quickly an extra $50 or $100 toward the principal adds up!

Another way to prepay student loans (or pay more than the minimum) is to schedule bi-weekly payments instead of monthly. By making one extra month of payments each year, you’ll chip away at your student loan that much quicker.

If you’re planning on making over-payments, double check with your loan servicer to be sure that payments are being directed to the principal value of the loan.

Bad debt misconceptions

Myth: Credit cards are nothing but trouble.

Fact: Credit cards aren’t inherently good or bad; it’s how you use them that determines their harm or value. Using credit for purchases that you pay off in full each month is smart because that diligence boosts your credit score. (On the flip side, never carrying a credit card balance means no payment history or late payments, which may hurt your score.) Plus, plenty of credit cards offer rewards, such as discounted travel, purchase and fraud protection, and cash back on purchases.

Recommended: 4 Simple Money Principles to Financial Fitness in Under 4 Minutes

Looking for the optimum amount to charge? Here’s a good rule of thumb: Keep the debt ratio below 30% of the credit limit. So, for example, if the limit on your credit card is $10,000, make it a habit to charge less than $3,000 each month. And pay off that full amount each month as well.

But those who are struggling to make the monthly payments or are in credit card debt, there are options to get that under control. One route to consider is consolidating credit card debt with a personal loan that offers a lower interest rate and a fixed monthly payment to pay off that credit card debt.

Myth: Getting a personal loan for a home renovation is a bad idea.

Fact: A personal loan could be your best friend when you need funds for home renovation and decoration. Contrary to what you might have heard, getting a personal loan for this purpose could be a tool that potentially improves its resale value.

For homeowners who have built up significant equity in their home and are planning a major renovation, a home equity loan is another financing option. If you owe $200,000 on a home valued at $500,000, for instance, you can apply for a home equity loan of $300,000. But for newer homeowners with little equity in their home, or those interested in smaller projects like a one-room remodel, a personal loan could be an option to consider.

Either way, it’s best to avoid spending more than is affordable or within budget. Keeping a home renovation on budget and working with professionals who will help you develop a plan of action and advise you on costs can be a smart move, depending on the scale of the renovation you are working on.

Myth: Auto loans are a waste of money.

Fact: Not necessarily. Only you can determine which expenses make sense for your budget and lifestyle. In 2020, the average monthly payment for a new car loan was $576 and the average loan term was 69 months. That’s not exactly spare change. There are ways to keep costs down, however.

If you buy an electric car, you’ll save money on gas ($800 to $1,000 annually ) and say goodbye to oil changes forever. And don’t forget to factor in the tax credit from the federal government (up to $7,500 ) and possibly even your state.

The Takeaway

Today, debt is more personal than the good debt vs. bad debt debate would have you believe. Rather than trying to classify your debt, consider the interest rates of each loan. Maybe you scored an auto loan with a low interest rate, but got stuck with a mortgage with a sky-high one. Securing a lower interest rate is a key part of any debt payoff plan, helping you transform “bad” debt to “good.”

Also, consider the value that things like education, a home, and travel add to your life. Education can open doors to a more lucrative and fulfilling career, your home can be an investment, and travel can provide the joy of exploring new corners of the world. Spend time thinking about your situation and determining your specific financial, career, and relationship goals. Then, based on those goals, develop a debt payoff plan that makes the most sense for you.

To learn more about managing your debt, contact a SoFi financial planner. In the meantime, share this article with someone you know who is struggling with debt—good, bad, or anything in between.

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It’s that time of year again: back to school time. And while students are anxious to walk through their school halls, check off their back to school lists, and make sure they have plenty of friends in every class, graduates may be struggling to pay off their debt.

Unfortunately, student loan debt is at an all-time high and continues to rise. The average student loan debt for 2017 graduates was $39,400 amounting to $1.48 trillion in total student loan debt. This exceeds the amount of credit card debt in the United States by $694 billion.

In the summer of 2016, we surveyed around 1,000 young professionals for The Impact of Student Loan Benefits, a white paper outlining the effect of student loan debt on employee recruitment. We found over 60% of respondents reported that student loan debt is one of the top two financial concerns in their lives. While student loans are clearly a stressor for millennials, there’s a way to prevent them from causing students so much anxiety.

Today represents a huge milestone for tens of thousands of medical students about to embark on the next stage of their medical careers: Match Day. If you’re a resident, we know you’ve been anxiously counting down the days. And if you’re friends with a 4th year medical or dental school student, we know you’ve been dealing with their anxiety. And hopefully for both of you, today is a huge relief.

We here at SoFi wish a hearty congratulations to all soon-to-be residents who have spent many sleepless nights in the library, crisscrossed the country interviewing, and are readying yourselves to become our next generation of health-care providers.

One of the best things about earning a degree in the United States is that students can borrow money to go to school. One of the worst things about borrowing that money? Paying it back—with interest. And now, with the news that the Federal Reserve has increased the target range of the Federal Funds rate by 25 basis points, you’re probably starting to sweat over whether the student loan payments that already tax your budget every month will go even higher.

But instead of simply stressing and hoping for the best, you can make an informed decision about what’s right for your financial future—and we want to help., Below, we’ve identified four steps you can take to get centered and make the right move on the heels of the announcement.

With the world’s longest election campaign season finally behind us, people across the country are trying to understand what a Donald Trump presidency means for them. If you’re one of the 40 million Americans with student loans, that means taking a closer look at President Trump’s statements about the runaway growth of college tuition and student loan debt, and his proposed plans to remedy the problems.

And if you missed our CEO Mike Cagney’s recent article in Business Insider discussing how the student loan industry will change this year, we recommend checking it out.