Good Debt vs. Bad Debt
Quick Comparison
Not sure where your debt falls? Here's a simple side-by-side look:
Good Debt | Bad Debt | |
|---|---|---|
Purpose | Builds wealth, assets, or opportunities | Pays for wants or short-term expenses |
Interest | Lower, often tied to an asset | High, often 20%+ |
Examples | Student loans, mortgages, business loans | Credit cards (carried), payday loans |
Impact | Increases income or net worth over time | Reduces income, adds stress |
Debt is a tool. The key is knowing which types you're using, one that builds or one that breaks. Choose wisely.
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