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Wed, February 12, 2025

How to Use Good Debt (While Identifying and Avoiding Bad Debt)


Published on 2025-02-12 05:41:09 - Kiplinger
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  • Not all debt is bad, but knowing the difference between good debt and bad debt and how to use them can help you get ahead financially and stay ahead.

The article from Kiplinger discusses the distinction between "good debt" and "bad debt." Good debt is characterized by investments that have the potential to increase one's net worth or income over time, such as mortgages, student loans, or business loans. These types of debt can lead to asset appreciation, tax benefits, or higher future earnings. Conversely, bad debt involves borrowing for depreciating assets or consumption, like credit card debt for non-essential purchases, which does not offer long-term value or financial growth. The article advises on managing debt wisely by using good debt to build wealth, while cautioning against the pitfalls of bad debt which can lead to financial strain due to high interest rates and no return on investment. It also provides strategies for handling debt, including understanding the terms of loans, maintaining a good credit score, and avoiding unnecessary borrowing.

Read the Full Kiplinger Article at:
[ https://www.kiplinger.com/personal-finance/how-to-use-good-debt-and-avoid-bad-debt ]
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