When used intelligently, debt can be of tremendous assistance in building wealth. However, the word debt strikes fear in our hearts, mine included, because we’ve all heard stories about people getting into bad debt and bad thing have happened to them. However, I have just learned an interesting fact I’d like to share. There are two different kinds of debt.
I did some research and found out that there is good debt and there’s bad debt. Good debt includes anything you need but can’t afford to pay for up front without wiping out cash reserves or liquidating all your investments, only take loans for which you can afford the monthly payments. Basically things that you need to get a loan on like college loans mortgages.
Bad debt, on the other hand, is debt you’ve taken on for things you don’t need and can’t afford, like going on extended trips to Monte Carlo. How do people get into these kind of so debts? The worst offender is credit card companies. Check out this link to see real life stories about people who are in credit card debt.
The amount of personal debt in America is ever increasing, and a large part of the reason is that credit has never been easier to get. Previously, credit card companies used to issue credit cards to people who could repay them. Today card issuers relish the chance to reel in those who’ll continuously charge beyond their means at 18 or 20 percent. That to me is just wrong.
Now, this revelation hasn’t made me any less fearful of credit cards. I know that eventually I’ll have to bite that bullet and get one. However, the reason that I’m afraid to isn’t because my blind perception of debt” but of the credit card companies themselves. They’re just evil aren’t they?
Go here for additional details on what you just read!. Unique version for reprint here: Good Debt vs. Bad Debt.