Written by Michael Parker
Not all debt is created equal. Some debt can actually help you build wealth, while other debt drags you down.
Examples: Credit card debt for clothes, payday loans, financing a vacation, a brand new car on a 7-year loan
Examples: Student loans for in-demand degrees, mortgages on affordable homes, small business loans that grow revenue
A car loan can be good debt if it gets you to work, bad debt if you financed a luxury car you can't afford. Context matters!
Even "good" debt should be managed carefully. Just because student loans can be good debt doesn't mean $200,000 in loans for a $40,000/year job makes sense. Borrow strategically, not emotionally.
Want to understand your total debt situation? Try our Net Worth Calculator to see your complete financial picture!