I'm About to Take on $5,000 in Debt. Here's Why I'm Not Worried

Debt doesn't always have to be scary.

Some personal finance experts are staunchly against carrying debt. They will tell you to avoid it at any cost, no matter what, always and forever. Then there are the realistic ones who realize that some debt is necessary, even preferable in certain situations. I tend to fall into the latter group.

It's also where I find myself right now.

Recently, our family car needed some work -- alright, a lot of work -- resulting in a bill around the $5,000 mark. We explored the idea of just replacing it, but in the end, decided repair was the way to go.

Now, I could have tapped into my emergency fund to cover the cost of the repair (or most of it, at least). But the thought of putting that much of a dent into my savings account was not ideal. Instead, I decided to finance the repair, taking on a $5,000 debt.

Manageable debts are less scary

Here's where you may be asking why I think having a four-figure debt hanging over my head was a good idea. Most sane people avoid debt when there are other options. To me, however, the key is that the debt is a manageable one -- and an inexpensive one.

What do I mean by that? Well, thanks to some financial know-how, that $5,000 debt shouldn't cost me a single cent of credit card interest. Without the danger of high-interest fees adding onto an already substantial debt, it lessens the time pressure to pay it off as quickly as possible.

How does that work? A 0% intro APR credit card. Basically, I applied for a new credit card that comes with a 0% intro APR for the first 18 months. This means I can carry a balance from month to month without accruing interest during that introductory period.

Minimum payments still required

Now, while I won't have to worry about interest fees adding up, I will still need to make at least the minimum payment every month to keep my account in good standing. If I miss one of these payments, not only will I get late fees, but I could also lose my intro 0% APR.

To make sure this doesn't happen, I like to set up automatic payments to cover at least my minimum payment every month. I'll also make additional payments according to the plan I've worked out to ensure I'll pay off the full balance before the intro period ends.

If the worst happens…

The main downside to intro APR offers is that they're only temporary. When the intro offer expires, your APR will jump to the standard rate -- which, with most credit cards, means 15% or higher. Depending on how much debt you still have at that point, that can quickly get very expensive.

But, I also have a plan if that happens. If the balance is low enough that I feel comfortable tapping into my emergency fund -- and we've been lucky enough to avoid other emergencies in the meantime -- I'll pay off the remainder from my savings.

If that's not an option, then I'll probably consider a balance transfer. If I can transfer the remaining debt to a card with an intro 0% APR on balance transfers, then I can avoid accumulating interest on that balance. I may end up having to pay a balance transfer fee, but those are typically in the 3% range, which is much better than the 15%+ I'd pay in interest without the transfer.

While I'm certainly not happy about the giant car repair bill -- or its resulting debt -- I'm glad I have the knowledge and ability to manage it. A little bit of know-how and a lot of planning means that what could be a terrifying debt isn't nearly as scary as it would otherwise be.