01/12/2023
From an early age, I never thought I would have a single credit card, nor did I know there was a difference between good debt and bad debt. I was a firm believer in if you can’t pay for it with cash, then you can’t afford it. Oh, how I was mistaken!
Good debt is any purchase (especially when on 0% interest terms) that generates income or appreciates over time. “It takes money to make money!” If it adds to your net worth, then it is good debt. Ex: real estate, education, and your business.
Bad debt is any purchase taken on carelessly. It usually consists of frivolous spending on depreciating assets. If it doesn’t rise in value or produce income, then this is a bad debt. With an exception of course, of daily purchases, normally bought with a bank card, like: food, gas, utilities etc… these purchases can be leveraged to generate points or cash back. That’s a discussion for another day.
Things in life aren’t always what they appear to be. Educating yourself is the most important investment you can make, and remember, If you can change your perception, you can change your life!