What is Bad Debt
Bad debt is the kind that holds you back
Bad debt is debt that:
Has high interest rates (20%+)
Is used for short-term wants instead of long-term value
Is easy to get into, hard to get out of
It usually comes from spending money you don't have on things that lose value immediately.
Examples of bad debt:
Credit card debt (carried month to month): Interest rates are often 20% or higher.
Buy Now Pay Later apps (BNPL): They make purchases feel easier, but missed payments bring fees and credit damage.
High-interest personal loans: Payday or "quick cash" loans trap you in cycles with massive fees.
Turning Bad Debt Into a Plan
Already carrying bad debt? That doesn’t make you irresponsible, it just means now is a good time to shift into strategy mode.
You can:
Create a payoff plan (Avalanche or Snowball method)
Refinance or consolidate to lower your interest rate
Set spending boundaries so the debt doesn’t keep growing
Final Thought: Bad debt drains your future. The sooner you recognize it, the sooner you can create a plan to break free.
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