Good debt vs. Bad debt

There’s a misconception about debt in the U.S. Some will tell you there’s good debt and bad debt. There are various opinions but most would tell you never to borrow money to purchase something with the potential to decrease in value over time.

Good debt such as a home, with the potential to go up in value. A car wouldn’t fit the bill as they normally drop in value 30% after you drive off the lot.

Credit card debt would be another loser. You’ll still have the credit card bills long after you’ve forgotten what you purchased.

Of course, the above is the conventional wisdom.

Now for the truth:

All debt is bad! Sure you can make an argument your home is going up in value and will be worth way more than the loan amount. But, the point is you’re still in debt. And being in debt is bad.

Being in debt is bad because you are in bondage to someone else. When you’re debt free you don’t have a problem of what if I miss a payment on my car or home? You don’t owe any money on anything.

Good debt verse bad debt is kind of like being “ALMOST PREGNANT”. You’re either pregnant or not pregnant. Never in between. It’s one or the other.

It’s the same for good debt or bad debt. You’re either in debt or you’re not in debt. Ask yourself a simple question. If you had a choice of being debt free on everything you own or owing debt which would you choose?

I’ll bet you’d take no debt over debt period. If that’s the case get out of debt and relax. You’ll naturally and easily discover a whole new freedom once you become the 20% of the folks’ debt free.

Take care

David…