By: Andrew Rosen, CFP®, CEP®

I am, like so many others, fully on the Game of Thrones bandwagon. The show is truly one of my favorites of all time (and I generally don’t gravitate to the fantasy genre, but I’m hooked). Since we are approaching the last few episodes (and I can only imagine who else has been killed off by the time you are reading this) I figured why not try my hand at a Game of Thrones themed blog. Well, here it goes.

In the Game of Loans, there is an evil force. While different, it is still as destructive as those villainous White Walkers. It’s virtually impossible to go an entire adult life without relying on loans in some way. Let’s take a second to review the handful of loans a typical adult may come across:

  1. Student loans
  2. Mortgage
  3. Home Equity loans
  4. Car loans
  5. Credit card
  6. Furniture loans
  7. Personal loans

Some of these are truly good type of loans, some are bad, and others reside in that grey zone.

The Jon Snow of loans:

I consider these the best types of loans, as they cover a necessity in today’s society. Typically, these loans are your knight in shining armor and are there to save the day. I’d put college and mortgage loans squarely in this category. Most of us aren’t fortunate enough to escape the dark winter of college without accumulating some debt. The good here, however, outweighs the bad. Having a college degree in today’s society helps one average about a $50,000/yr starting salary, whereas those with just a high school degree average $30,000/yr. The lifetime earning of this difference makes a college loan very “good.”

The other good loan type would be your mortgage. I don’t recall ever meeting a client who hasn’t had a mortgage at one point. When these loans are eventually paid off, you are living rent free! Although I don’t consider a home an investment, homes/properties usually do increase in value over time.

The Varys of loans:

Varys is a sneaky one–he isn’t all bad and he isn’t all good. He has his own agenda, but he certainly serves a greater purpose. The loans I put in this category would be loans with large consumer purchases–car loans, remodel/home improvement loans, large appliance and furniture loans. Sometimes, we just need to borrow money to make that larger purchase. If done out of a real need, than these types of loans are better; it gives one a way to get that car, while paying over a longer period of time. Just make sure you can afford the product you’re financing, otherwise you’ll find yourself getting into a messy situation. Depending on things like payments, necessity, and interest rates, you can see how these can be good or bad.

The Cersei Lannister of loans:

Cersei is the manipulative and hated queen. Even when you think she has redeemable qualities, she shows her true colors. She’s just out for herself and to hell with everyone else! Credit card debt earns the title of Cersei Lannister (of loans). They seem innocent, until you can’t afford to pay them off each month. Next thing you know, 20% interest comes knocking at your door. Then you find yourself like many others making a deal with the devil (Cersei in this case) and wondering how to get out.

While credit card debt is “evil,” it’s important to know how it can be used properly in desperate times. If you can manage a plan to make it temporary, that’s the best path. Heck, even Cersei has some redeeming qualities (somewhere).

Game of Loans!

There you have it; my attempt to play off the Game of Thrones hysteria. The lesson I want to be learned here is that all loans are not created equal. Use them wisely or else!  (It would be a shame to have the White Walkers of debt come a-clawing at your castle gates!)

On a personal aside, I’m rooting for Sansa Stark to take the Iron throne, with a close second of Jon Snow. Maybe it’s because I have two strong-willed daughters at home and there is something redeeming about a strong, intellectual woman who has “learned the game.” Who are you rooting for?