Bad Debt and Good Debt: The Differences
Many people believe that having no debt is ideal, but in many situations, debt can actually be considered good for your finances if it helps you build wealth. For example, if you cannot afford to buy a home with cash, you may go into debt with a mortgage. That, in turn, can help you use your housing payments to build a real estate asset instead of renting.
Loans like mortgages are usually considered good debt because they provide value to the borrower by helping them build wealth. However, many other kinds of debt are not as healthy for your finances.
Key Takeaways
- Debt can be considered good if it has the potential to increase your net worth or significantly enhance your life.
- A student loa…
Read the full article at: https://www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp