How To Tell Which Debt Is Good Vs Bad

By The Financial Diet Monday, June 11, 2018

If you have debt, you probably feel like it is all bad debt — and we get that. Being in debt never feels good; it pretty much universally feels terrible. But the thing about debt is that some of it is better than others, because there is a potential for return on your debt-investment. Sometimes even mostly-bad things are sort-of good, even if they don’t feel like it in the moment.

The debate is a hot one for sure. Some people truly do believe that all debt is bad; some people firmly believe that some debt is a necessary part of building good credit; some people believe that even bad debt is good, because things like personal loans and auto loans are necessary to get you things that you want out of life. We can’t say with certainty who is right. What we can do, however, is lay out the facts, explain what good debt versus bad debt is, and let you decide where you stand yourself.

Regardless of which camp you’re sitting in right now, Erin took the opportunity in this week’s video over on the TFD YouTube channel to discuss good debt versus bad debt, and help you try and distinguish between the two. If you have debt (or are considering taking some on for any reason), check out this video for a little extra info in this week’s installment of the 3-Minute Guide, brought to you by Skillshare.