What Is ‘Good Debt?’

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9 months ago

So, there is such a thing as ‘good’ debt? Well, some personal finance professionals believe so. Of course, it’s the type of debt that increases your net worth. Two great examples of good debt would be an appreciating house, or college tuition. These are things that pay for themselves and lead to higher earnings in the long run. Your degree would in theory allow you to get a better, higher paying job. Therefor, the debt you created has longevity and purpose, giving it the name ‘good debt.’

On the flip side, credit card debt is not considered good debt. There is no long-term payoff for you if you get into credit card debt. In fact, you only continue to dig yourself into a deeper hole. High-interest credit card debt is considered’bad debt.’ Pay off your credit card debt first, then focus on the ‘good debt.’

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