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.
Yeah you should have some debt though...Some debt is always a good thing, since it will help you build credit and secure larger purchases in the long run. But CC debt is not good debt.
Jp is correct about having some debt. You need to establish credit because low and behold somewhere in your long life you will need it. Especially in home and car purchases. Plus we all know that some employers use it as well as utility companies.
yes, I too think JPolito is right. A debt which will helps you to build up a good credit history is a good debt since it adds to your credit score. It is good so long as you are able to repay the debt on time. But from the moment you become delinquent, it becomes a bad debt, as this gets listed in your credit report and lowers your credit score.
I think that pay day loans may be considered as a bad debt as they come with a very high interest rate which people sometimes cannot afford to pay and end up in debt circle. Any loan which you cannot afford to pay becomes a bad debt and gets listed in your credit report lowering your credit score. But if you can repay a debt on time, no debt is a bad debt.
About PDL's. Even if you can't pay the PDL back, and it turns into a 'vad debt', ALOT of PDL's aren't put on your credit. Some of the CA's that 'represent' the PDL companies may go on your credit. But...PDL's are a story in itself.
I just read an article about PDL in last nights paper for PA residents. They are by Feb1 of next year (at least for PA residents) going to have to be licensed and only allowed to charge so much interest. This will apply to internet lenders and out of state lenders. Score a point for the good guys.
I agree with Anthony but would like to add a few more points. If you buy a house with a debt, I think, it is a good debt because in future you may be earning from it. I consider it as a good debt because when you borrow money for purchasing the apartment, you get tax deductions too and the value of the property appreciates over time and in future you may sell it at a much higher price. But if you purchase a car or a luxury item with debt, it becomes a bad debt because the value of the good depreciates over time.
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.
In a nut shell....
Credit Card Debt is a Bad Debt....
School Loans and house loans can be considered Good Loans
Pretty good explanations here. I perfer no debt at all but these days that is next to winning the lottery.
Yeah you should have some debt though...Some debt is always a good thing, since it will help you build credit and secure larger purchases in the long run. But CC debt is not good debt.
D E B T is a four letter word!!!!!!!!!!!!!!!!!!!!!!!
Jp is correct about having some debt. You need to establish credit because low and behold somewhere in your long life you will need it. Especially in home and car purchases. Plus we all know that some employers use it as well as utility companies.
yes, I too think JPolito is right. A debt which will helps you to build up a good credit history is a good debt since it adds to your credit score. It is good so long as you are able to repay the debt on time. But from the moment you become delinquent, it becomes a bad debt, as this gets listed in your credit report and lowers your credit score.
I think that pay day loans may be considered as a bad debt as they come with a very high interest rate which people sometimes cannot afford to pay and end up in debt circle. Any loan which you cannot afford to pay becomes a bad debt and gets listed in your credit report lowering your credit score. But if you can repay a debt on time, no debt is a bad debt.
debt
About PDL's. Even if you can't pay the PDL back, and it turns into a 'vad debt', ALOT of PDL's aren't put on your credit. Some of the CA's that 'represent' the PDL companies may go on your credit. But...PDL's are a story in itself.
I just read an article about PDL in last nights paper for PA residents. They are by Feb1 of next year (at least for PA residents) going to have to be licensed and only allowed to charge so much interest. This will apply to internet lenders and out of state lenders. Score a point for the good guys.
Anothonys explination is perfect. Any debt that helps you by building credit I.e a home or auto loan or CC is good debt.
Any debt that hurts you, anything in default that is harming your score or you cant afford is bad debt
anthony usually gives some pretty good advise.
I agree with Anthony but would like to add a few more points. If you buy a house with a debt, I think, it is a good debt because in future you may be earning from it. I consider it as a good debt because when you borrow money for purchasing the apartment, you get tax deductions too and the value of the property appreciates over time and in future you may sell it at a much higher price. But if you purchase a car or a luxury item with debt, it becomes a bad debt because the value of the good depreciates over time.
Good points Justin, so we should only be investing in what will increase it's value in time.
I always like when you add to a post Justin. It really provides alot more useful info.