Good Debt vs. Bad Debt: What's The Difference and How Can You Tell The Difference?

When it comes to money, there are good loans and bad loans. Everyone knows this, but the terms can be confusing. If you’re wondering what good debt is versus bad debt, this article will help you get a handle on the difference.
 
Bad debt is anything you owe that is expensive and will cost you in the long run. The problem with having bad loans is that they’re expensive in the long run. If you have an obligation to pay back a loan that costs you more than it’s worth, you have a bad loan.
 
Even though it might not seem like it now, your bad loans will cost you in the long run. Here’s how to tell the difference between good debt and bad debt.

What is debt?

Debt is the amount you owe. It’s different than credit, which is the amount you have access to. When you apply for a loan, the bank takes your earnings and subtracts the amount they expect you’ll pay them back. This is the amount they consider you owe. It’s not a good or bad thing, it’s just how debt works.

Good Debt

A good debt is something you have that you can pay off quickly and easily. You can pay off good debt with either extra income or by cutting back other expenses. Popular good debts include student loans, mortgage loans, and car loans. You can pay off good debt with either extra income or by cutting back other expenses.

Bad Debt

A bad debt is something you have that will take a long time to pay off. Popular bad debts include credit cards, medical bills, and utility bills. Bad debt can be paid off with either more effort or by cutting back on other expenses.

What’s the difference?

Good debt is something you have that you can pay off quickly and easily. Bad debt is something you have that will take a long time to pay off.

How to tell good debt from bad debt?

If you have good debt, then you have a way to pay it back. In order to pay off bad debt, you’ll have to work hard and make sacrifices. If you have good debt, then you have a way to pay it back. Bad debt is something you have that will take a long time to pay off.

Conclusion

Debt is a fact of life. In fact, most economists agree that debt is a necessary part of the economy. That being said, debt should always be handled responsibly. If you find yourself in debt, here are a few tips to help you out.
 
Who would have thought that debt could be so confusing? Hopefully, this article has helped you understand the difference between good debt and bad debt. If you’re still having trouble, don’t forget to check out our free debt repayment guide!

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