Good Debt VS Bad Debt
When people hear the word “debt,” they automatically think of the bad. They consider the bailiffs and the red letters and the debt collector phone calls.
The thing is, there are debts out there that aren’t so bad. You couldn’t consider your mortgage a bad debt, right? You wouldn’t consider your car a bad debt, even though you’re paying for it every month!
Bad debts may be scary to cope with, but good debts tie up your income in a positive way. They make it so that you can continue to have nice things in your life.
Debts don’t always have to equal something bad, so rest assured, you need to read the article differences below. So, let’s look at the differences between the two.
The Good Debts
Let’s start with the good ones. Good debt is so-called because it’s got a positive spin for your life. Your student finances, your mortgage, your car finance with Martin Brothers Motor Company are all positive debts.
These are the debts that offer you a home, an education, and a car, all of which you need for your life. Your good debts are going to change your life in a positive way, and the better you handle those debts, the more you won’t have to worry about money flowing in and out of your account.
The Bad Debts
Bad debts are mostly surrounding consumer debts. The debts on the credit card, the debts in question are those that you do not necessarily need, but you indulge in anyway. You don’t need movies out if you’re using a credit card to attend the movies or a theatre show if you have to borrow money to do it.
If there is a way for you to save for something rather than borrow it, you should always err on the side of savings.
Always pay attention to what you’re borrowing and how much you will be paying back. The last thing that you want is to build more debt that is unnecessary. It’s very easy to make decisions that are poor when it comes to debt. You want to have what you want to have – but often, it’s out of your price range.
Shiny credit cards and loans make it possible for you to get there, even if you know it’s going to put you out of pocket.
Good debts or bad, you need to know how to pay for them all. Even if the debts are considered as good ones, you need to know how you plan to pay them. What is your work situation like? If you are serious about being out of debt, you need to think about a plan so that you can continue to have the things that you want to have and enjoy life at the same time.
It may mean that you take longer to pay your good debts, but where you can, plow your spare cash into them and pay them off faster!