What are differences between the good and bad debt?

[Agung]

What are differences between the good and bad debt?

[HHM]

Ummm, you need to elaborate.

[shabam]

Good debt is usually associated with borrowing money to buy something that will generate income / revenue / wealth. For example: business loan or student loan or rental property

Bad debt is unsecured debt like credit cards. Which as we know most people use to buy c--p they don't really need or can afford.

[JRScott]

In truth there is no real good debt.

The only two debt investments that are worthwhile are:

1. A Home, it is almost impossible to buy a home today without debt. Home debt you should keep your payment to 25% or less than your household gross income. This will help weather economic troubles if you wisely use the remaining income wisely.

2. Education. Again you need to keep education spending in check. Far to many people are borrowing to much in student loans. Look at your projected income upon graduation and the projected debt from student loans. Make sure the payments on this debt do not account for more than 10-15% of your gross income. If it is your in trouble.

A third area that can lead to substantial debt you may not be able to avoid is medical care, especially if you lack insurance. If you believe you need extensive medical care o may need it, I would highly recommend trying to find either a job with insurance or an affordable insurance policy. If you are making your state's median income this should not be overly difficult, if you are making below your state's median income it can be a real challenge. Avoid elective surgery. If you have no insurance ask if there are any charities in your area that would help with payment, usually there are some and they vary to effectiveness.

There is no other reason to go into debt.

It is far better to buy a older used car (even one 10-15 years old) and have no car payment than to buy a brand new care with a car payment. You can then take the money you would have spent in car payments and upgrade in about 5 years if you resist the temptation to spend it.

There is no need for a credit card in any form. If you build an emergency fund. You will be fine without one. Anything that you could buy with a credit card or other such debt method you can more readily and economically purchase through planning.

I've gone down the debt path, for 30 years I had no debt. From the time of taking on debt to bankruptcy took me only 7 years. It is seductive, It is an easy path, It is a path that can lead to destruction.

[AngelinaCatHub]

Excellent post 'Scott. 'Hub=no credit cards.

[citicredit.asia]

Debt in and of itself is not a bad thing. Both of us were able to start our own businesses because of debt; Steve began his own law practice, and Azriela began her own entrepreneurial consulting business. So we understand what debt is and why some debt is great debt.
Debt that helps you, enriches your life, is manageable, and is not a burden can be called good debt. For example, student loans are good debt if they enabled you to get through school and further your life goals. They are bad debt if you dropped out of medical school after one year to become a writer. A good debt helps; a bad debt hinders.

https://www.citicredit.asia

[justplaintired]

In truth there is no real good debt.

The only two debt investments that are worthwhile are:

1. A Home, it is almost impossible to buy a home today without debt. Home debt you should keep your payment to 25% or less than your household gross income. This will help weather economic troubles if you wisely use the remaining income wisely.

2. Education. Again you need to keep education spending in check. Far to many people are borrowing to much in student loans. Look at your projected income upon graduation and the projected debt from student loans. Make sure the payments on this debt do not account for more than 10-15% of your gross income. If it is your in trouble.

A third area that can lead to substantial debt you may not be able to avoid is medical care, especially if you lack insurance. If you believe you need extensive medical care o may need it, I would highly recommend trying to find either a job with insurance or an affordable insurance policy. If you are making your state's median income this should not be overly difficult, if you are making below your state's median income it can be a real challenge. Avoid elective surgery. If you have no insurance ask if there are any charities in your area that would help with payment, usually there are some and they vary to effectiveness.

There is no other reason to go into debt.

It is far better to buy a older used car (even one 10-15 years old) and have no car payment than to buy a brand new care with a car payment. You can then take the money you would have spent in car payments and upgrade in about 5 years if you resist the temptation to spend it.

There is no need for a credit card in any form. If you build an emergency fund. You will be fine without one. Anything that you could buy with a credit card or other such debt method you can more readily and economically purchase through planning.

I've gone down the debt path, for 30 years I had no debt. From the time of taking on debt to bankruptcy took me only 7 years. It is seductive, It is an easy path, It is a path that can lead to destruction.

I agree with angelinacathub this is a good post. I totally agree with this.
Future debts for us are our home and maybe an older used car if one of ours dies. Never another cc!!

[cool33097]

Well said JRScott.