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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?
college, debt, frugal, saving money