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Understanding Debt

Good Debt and Bad Debt

Although most people should not be seeking to go into debt at all, it is still good to know that if you are going to be in debt, you should understand what kind of
debt you will be going into. 

Is Debt Good?  Is Debt Bad?

When considering whether or not debt is good or 
bad, you must first consider that when you go in debt 
to someone you are under contract to that person 
you owe. 

The contract whether written or verbally must be
honored or you will somehow pay the consequences
of not honoring it.  Those consequences can be very 
detrimental to your financial life. 

So before you judge whether it is good or bad lets 
take a look at the consequences of debt.

Consequences of Debt

There are both negative consequences of being in debt as well as positive 
consequences of being in debt.

Positive Consequences of Debt

  • If you pay your debt as arranged it can boost your credit ratings and your credit score
        which means you can pay less money or no money on deposits on such things as                                       car insurances, utilities, and apartments.  Plus you can get lower interest rates on credit
        cards, auto loans, home equity loans, mortgages and any other loan.

  • Having different kinds of debt such as revolving and installment debt can boost your credit rating and credit score if paid back as promised

  • Your net worth can increase as you pay down a mortgage on your house


Negative Consequences of Debt

  • Can cause you to lose everything you own

  • Can cause you to file for bankrupt if you can't pay your debts

  • Can cause you to have bad credit

  • Can give you a low credit score

  • Can cause you to be denied a mortgage or a car loan

  • Can cause you stress due to you worrying about the debt which can lead to health issues

  • Can cause your liabilities to be higher than your assets which will lower your assets

  • Can cause marital problems

  • Keep you from giving to your church or charities

  • Keep you from starting a business

  • Keep you from taking vacations and enjoying life

For More Information on Good Debt and Bad Debt Click below.

Next Page - Understanding When Debt is Bad






























                       Hi, I'm Abbie.
                       Your financial 
                       education tutor.

                    Welcome!