There is a difference between good debt and bad debt. Although many people feel all debt is bad, there are few people who made a financial difference in this world without debt. Even Dave Ramsey wouldn't be who he is without taking on a bunch of bad debt and going bankrupt.
Bad Debt
Bad Debt is easy to recognize. Any debt used to consume is bad debt. It really doesn't matter how this debt is structured. Even fixed low interest mortgages can be bad debt if you purchased a home you cannot really afford. If debt is used to consume then it is bad debt. By "consume" I mean purchase non-necessities. For example jet ski, snowmobile, vacation home, car, electronics, or my wife's favorite, clothing.
Any Bad Debt should be treated like the plague. Burn it! Throw it out. Stay away from it. If you have it pay it off as soon as possible. Even if you eat only bean and rice until it's gone, it is a curse and will inhibit any financial progress in your life.
Good Debt
Good debt is debt that makes money. If I purchase a multifamily property I'm going to try and borrow as much of the money as possible. By doing this I can keep my capital liquid allowing for more flexibility. The multifamily property is an asset that will make money every month. It will also pay off all my expenses.
If the debt is used wisely as part of a larger wealth building strategy than it is Good Debt. Structured properly, good debt doesn't need to be paid off quickly. Some people may never want to accelerate payments.
Good Debt Can Be Bad Debt
If I choose a multifamily property that doesn't make money (ie too many expenses, doesn't rent well) than that mortgage could quickly turn into bad debt. Any debt, including "good" debt, that feels like a burden is bad debt for you.
Every situation is different. Every one has a personal debt choice. Become and expert so that you can manage and minimize your risk. Have your Financial Survival Kit, so that if something goes wrong you will be ok.
Be Smart and Thrive.
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