How do we actually measure whether our finances are on the right track? Is it the size of our house? Whether we can take vacations? How much debt we’re carrying?
Those questions alone show how complicated our relationship with credit can be. Sometimes it feels like a badge of honor, other times like a weight we’re trying to shake off.
One of the clearest ways to understand your financial health is by tracking your net worth over time. And no, that’s not just for ultra-wealthy investor types. It’s simply the difference between what you own and what you owe. The goal is steady progress—owning a little more and owing a little less as time goes on.
And here’s something that might surprise you: debt can actually help you build wealth when it’s used intentionally.
Understanding Equity
Equity is the gap between what something is worth and what you still owe on it. If you owe $10,000 on a car but could sell it for $15,000, you’ve built $5,000 in equity.
Debt can be a tool that gives you access to things, like a home or a reliable car, that you couldn’t buy outright. As you pay down the loan, your equity grows. Some assets, like a home, often appreciate over time, passively increasing your net worth. That equity matters because it represents real value you can tap into later, whether through selling, refinancing, or simply strengthening your financial foundation.
Equity Through Opportunity
Credit can also create opportunities that aren’t as easy to measure on paper. A car loan that gets you reliable transportation to work? That’s a win. A degree or certification that opens the door to a higher income? Win.
The key is making sure the debt fits your budget. Oversized student loans, car loans that stretch too long, or a mortgage that leaves no breathing room can turn opportunity into stress. Used wisely, though, debt can be a stepping stone rather than a stumbling block.
To maximize equity, focus on paying down the liability side of the equation. That means paying credit cards in full when possible and choosing shorter loan terms, like a 3–5 year car loan instead of 6+ years. Longer terms often mean you’re barely keeping up with depreciation.
Building Financial Access
Think about friends who borrow money. One always pays you back, the other… not so much. If both ask for $100, you already know who you’d trust.
Your credit report works the same way. Starting small, maybe with a secured credit card or a small loan, and paying on time builds trust with lenders. Over time, that trust can mean better approval odds, lower interest rates, cheaper insurance, and more housing options. It’s not just a number; it’s access.
For extra tools and ideas, explore SaverPerks credit building tools and safer borrowing options.
When Credit Isn’t the Right Tool
Like any tool, credit has good uses and not-so-good ones. A hammer is great for nails, but terrible for your toes. Debt is similar: powerful when used with intention, painful when used without a plan. Pay attention to warning signs—when payments feel stressful every month or you’re borrowing just to keep up with existing debt.
A special note on “cash-back” or rewards cards: they can be tempting, but the 2–3% reward is a one-time perk, while the 15–20% interest can linger for years if you’re only making minimum payments. You’ll save more by paying down the balance first, then deciding whether a new card makes sense.
For example, if you’ve saved for a vacation and can pay the card off in full the next month, those bonus points can work in your favor—just avoid opening new cards too frequently.
Moving Forward With Intention
At the end of the day, the most effective path is having a plan. Paying down unsecured debt, then thoughtfully deciding whether taking on new debt supports your long-term goals. If you’re unsure about next steps or feeling stuck, reaching out to a credit counselor at a trusted non-profit, like Greenpath or MMI can provide clarity and support.
Your credit and your debt should be tools that help you build, not barriers that hold you back. With small, intentional steps, you can strengthen your financial foundation and create more stability over time.
