Good Debt v Bad Debt

Debt is when you borrow money. Generally this would be from a financial institution however some borrow from family, friends or others. However for the purpose of this course we will assume a financial institution. Debt can be classified into good debt and bad debt and it comes down to how you use the money. 

When you use the money from the debt to buy assets that grow in value or makes money, it is called good debt. This is because at any stage you can sell the asset, pay off the debt and have money left over. 

The opposite of this is bad debt. This is when you buy an asset that goes down in value. If you decide to sell the asset you will still owe money to the financial institution.

Your fun task is to start to look at your debt and think about if it is good debt or bad debt. Then create a plan to pay off your bad debt.

Can you see which of your debts are bad debt?

Can you calculate which of your debts are good debt?

How do you feel you can pay off your bad debt?