Good Debt - Debt That Helps You

Debt allows you to do things you otherwise could not do, like start a business, go to college, or pay for a home. Debt constructs buildings and funds investments and entire corporations - even the government is funded by debt. The trick is to foster debt that help the cause and banish the ones that don't. Not all debts are bad debts.

Some examples of debt that may be considered good debt:

Home Loans - A mortgages can be great debt. Not only does it permit you to own your own home, but it also allows you to build equity. It is an asset.

Car Loans - A car loan can be a fine debt because you get something long-lasting out of the debt. If you need a nice car for your job, a car loan may be considered good debt because it helps your career. However, a car loan that you cannot afford is a bad debt because it detracts from your life.

Business Loans - If you can service the loan and it helps you make more money, the loan is good debt, but if the loan is nothing but a source of problems for you, the debt is bad.