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Good Debt
Just like bad debt, there're really two ways to look at good debt. You can look at it from a business aspect and/or from a personal finance aspect.
Well since this debt tutorial is all about personal finances, I will explain good debt as it pertains to
your personal financial life.
What I have learned is that all debt is not bad.
Although I think that you should try to avoid being in
debt as much as possible or at least reduce your
debt if you're already in debt, there are some debts
that are considered to be good debt.
What is Good Debt?
Good debt is when you borrow money to buy
something that appreciates over a period of time.
This kind of debt can be considered an investment
that will pay greatly years to come.
Examples of Good Debt
- Some mortgages
With that being said there are some home mortgages that may not be a good debt. There are a lot of things to consider when purchasing a home. You have to do your research to see if it's a wise financial move to purchase a house. Some house purchases can be considered a liability instead of an assets which can lower your net-worth so be careful when financing a house.
- Some auto loans
- Student loans
What can good debt do to your financial life?
- increase your net worth
- increase your credit score
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Hi, I'm Abbie.
Your financial
education tutor.
Welcome!
