Is there such a thing as Good Debt?


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Can the words “good” and “debt” actually go together in the same sentence?  It’s a hard pill to swallow.  My entire life, I was told that debt is bad.  Stay away from debt.  Credit card debt is a temptation from the devil (ok, that’s an exaggeration…but you get what I’m saying) and then…adulthood hit.  And everything I was ever told or taught up to that point, was no more.  College debt was a given, and is actually common and expected.  So…a little credit card debt up to this point is worse than a $50,000 student loan?  Okay, I can buy that, I guess.  (I did get 2 degrees so I guess I fell pretty hard for that)  But then, after graduation, the American dream of owning our own home.  More debt.  And it’s big-time debt…

So, ask yourself what differentiates bad debt and good debt?  What makes something “good” debt?  Something that is looked at as an investment like schooling or a house that can earn equity?  Sure, I get that.  BUT, there is no guarantee of a better job for going to college…and remember that housing market crash a few years ago when everyone lost a lot of money that they’d been depending on through the equity of their home?  So…are those items still considered good debt?  or does good debt come with prequalifications that have to be met?

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It’s all WAY too confusing and time-consuming than I’m ready to commit to honestly.  My bottom line in life is that debt…is debt.  Interest rates are high no matter what type of debt you have, and paying interest on anything is throwing away money.  Bottom line.  While I do agree that some debt is more “careless” than other debt, I still feel that debt in itself falls into one nice neat little package.  (or big package depending on that debt size)

According to The Motley Fool, good debt can be a good thing…in moderation.  Pretty simple, huh?  Just like anything in life.  Anything in moderation can be fine.  Sugar?  Alcohol? Exercise?  All fine with good, controlled moderation.  But, once that moderation becomes less, it then crosses the line into something that can be viewed as bad.  Same as debt.  With spending moderation, debt can be good.  Once that line is crossed, it’s can become a  bad bad bad debt.

But, who decides that line?  Is it a personal choice or a debt-to-income ratio?  My philosophy is 0% debt.  I strive for that each and every day.

What do you think about debt?  Is it good, bad or are you in-between?

Debt_Good or Bad_Saving Money

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43 thoughts on “Is there such a thing as Good Debt?”

  1. Alan Moore says:

    Debt in life is inevitable. I feel that if the debt is manageable and payments are time then when it comes to probably the biggest debt in life, the house, then a mortgage company can see if the person is reliable and does pay their debts. I don’t think they are grouped into good or bad, more like have to or not have to.

  2. now, this is what i’m working on this year. great tips

  3. In the UK we are encouraged to a degree to run up some debt and pay it off. It can help to build our credit rating which helps lenders see us as a more trustworthy bet. Debt is only good if you can manage to pay it off, to my mind at least.

  4. up until a few years ago, I never even had as much as an overdraft. Had never borrowed money and then applied for a phone contract and was refused as I had no credit history. I now have one or two store accounts which I have used carefully just to get a credit rating so when it comes to buying my first house I should be ok! I think if carefully used debt isn’t necessarily a bad thing.
    Carly Markham recently posted…Me and Mine (January 2018)My Profile

    1. Thena says:

      Great points as it can be important to build up credit.

  5. Charli Bruce says:

    I used to be completely debt free and didn’t have a worry in the world. When I split from my daughters father years ago I realised I couldn’t actually run my household without getting into ‘good debt’ as here in the UK to be able to get anything you have to prove that you can be trustworthy so we are told debt like that is good. So I now have a credit card and a few other things that aren’t substantial but allow me to be able to live an easier life x

  6. It is all about personal perception I think. There have been times in my life where debt was inevitable as it was ow I was eating so maybe that informed my feeling now.

    Myself and my husband always marvel at some of our friends cavalier attitude to take out credit and go on holidays they cannot afford but seriously I cannot sleep when we owe anything.

    1. Thena says:

      I feel that same way!

  7. Linda Luke says:

    I have had both good and bad debt. The good debt was mostly for affordable real estate. My first home that I owned and then a rental property I had for a couple years. I now live mortgage free and thought that was the best idea, but sometimes wish I had a small very workable mortgage for the tax benefits.

  8. Linda Hobbis says:

    I think it depends how you’re brought up. We were taught all debt is bad and that you need to pay your way but sometimes when I see people driving the latest Range Rover or booking their third holiday of the year I think, you know, they might be in debt but they seem to be having a good time. I guess payment comes later!
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  9. Laura Dove says:

    This is so interesting! I never really thought about there being such a thing as good debt, I was always brought up to believe that all debt is bad!
    Laura Dove recently posted…Dear pregnant strangerMy Profile

  10. Sarah says:

    I feel a life without debt is unrealistic. Maybe you’ve had debt in the past, and now become debt free but it’s near unavoidable! I definitely think there is such thing as good debt though! (I mean it’s still debt, so it’s not ideal, but it’s for good reason and much better than bad debt!)

  11. I’ve never thought to label debt bad or good, unless we are talking something like a payday loan and then it is always bad. if you take the debt with good consideration and you are able to repay it on the terms then it can make all the difference. Mich x
    michelle twin mum recently posted…The Highs and Lows of my Spa Day at The Grand Hotel, EastbourneMy Profile

  12. Liz says:

    This is a good question! I always think of it as bad thing though. I just wish there was no such thing as debt but that’s life!

  13. Fatima says:

    I believe, everything done with moderation is fine. However, sometimes people loose control and they start overdoing something which make things bad. This was a great evening read!

  14. Ray says:

    I hate being in debt. I find being out of control and owing money to be the single most stressful thing ever. Even personal debts with family stresses me out. That being said, some debts are unavoidable. I think if you know you’re able to handle it and keep on track of payments, then, in moderation, it’s okay.

  15. I guess I understand about good debt, as something like a mortgage is a necessity which pretty much everyone needs and it’s paid a lot at a time as it’s an investment x
    Rhian Westbury recently posted…Valentines Gift Guide | What To Buy The Woman In Your LifeMy Profile

  16. I have had both over the years and whilst I do believe there is such a thing as ‘good debt’, I’d rather not have any at all

  17. Unfortunately I have debts due to several problems in the past. I am paying it off and try to live within my means now. Kaz

    1. Thena says:

      Keep working to pay it down, you got this!

  18. I’ve been debt free (including house) for several years and it is very freeing. I don’t believe there is a good debt, because “borrower is always slave to the lender”. I prefer freedom.

  19. Lynne Harper says:

    I have been bad with debt in the past but have really turned things as I have gotten older :0 its so easy to slip into debt wanting nice things when you just can’t afford them

  20. Ithfifi says:

    I don’t really have any experience with debt at all, I’ve never taken any loans or owed any money other than perhaps a phone bill. I’d rather keep it this way but I know in time I will probably need to make life changing choices that will require this sort of action but while I can I am happy not to owe anything.
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  21. It is terrible how debt is a chain in peoples lifes – people have to get in debt to buy a house – well the majority of people x
    Melanie williams recently posted…Valentine’s Day Gift Guide 2018 by Forkward Thinking FoodinistaMy Profile

  22. I think finding that line and not crossing it is key. People fall into huge debts because of lack of boundaries.

  23. Lyosha says:

    Good points! i’m blessed with having a lot of financial counsel support and I can’t say I really understand much of it but your post was an educational read for me
    Lyosha recently posted…CombortableMy Profile

  24. I’m with you. Unfortunately i do have debt but I’m working to get that eliminated!

  25. Elizabeth O says:

    I think debt can be good as long as it is kept within your personal manageable boundaries. As long as it is not the kind that consumes you, then yes, I do believe that not all debt needs to be negative.

  26. Liz T says:

    I was raised to believe that debt was bad and that it is something that should be feared and avoided at all costs. However, as your post explains, debt and credit does not have to be so terrible. I think your points about ‘everything in moderation’ is really the key here.

  27. Preet says:

    This is so interesting, I have had both good and bad debt in the past. But again, moderation is the key. Even if the good debt, but in moderation.

  28. Nadia says:

    What is defined as “good debt”? In my opinion its all bad, unless its 0% interest. The old folks used to say, if you can’t pay for it in cash- you don’t need it. Society makes it seem normal to have some sort of debt. Obtain a degree, student loans. Want that beautiful car, lease or borrow. I think borrowing within your means is key. Never borrow more than you can afford to pay back. Never borrow to pay bills or use it as extra spending money.

    1. Thena says:

      Great advice!!!!!

  29. Shubhada Bhide says:

    This is such an interesting post to read. For me, dept can be good if we are well versed in managing. But if we have nothing to do, let’s just avoid debt.

  30. I think we all get into some debt at least once in our lives. I know I hate overdrafts & credit cards, so I have neither. However, I have had a few loans that I have paid off to buy things I needed for the house etc.

  31. I really want to get to the point where I have 0% debt but it isn’t always that easy and I think it’s a balance between living life and really enjoying it and being sensible…I’m forever trying to work out what that balance is though!

  32. Ana Ojha says:

    I have to admit that I don’t want to be in any debt. I completed my education loan a few years ago but I agree with you that moderation is a key!

  33. After years of drowning in debt, we are finally recovering. I think once you learn from your mistakes, chances of repeating them are much lower. Thank you for the article.

  34. Fabiola Zefi says:

    I love this topic, so close to my heart. We teach our children all their life that Education Debt is ok yet any other debt, is not. It’s so ridiculous. I just spent money on a life coach to help me with my business, got myself in debt because of that, but I want to improve myself and business, isn’t that more important than anything else? My happiness.

  35. kumamonjeng says:

    I need to learn to get rid of my bad debts and this is useful tips for me to be wiser! I need to be capable of looking after my wealth!

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