Are you debt-free? Well, good for you. You may have heard most people incurred debt.This is normal. It is nearly impossible to be free from debt considering the economy has to offer. But, having debt also makes sense. The thing is, you need to evaluate which debt is good for you and which is not.
In this post, I want to share a little information on what good debts are. Good debt is sometimes called justifiable or those unavoidable debt. It is something you need but couldn't afford to pay at the moment without of course involving your cash funds and liquidating your assets. They are called good debts because the cost now is smaller compared on what it would cost on the upcoming days.
Examples of good debts are education and housing loan. The desire to borrow money that is used in earning more is reasonable. If your money gains higher income than the interest, it is good. Generally, the interest is much lower than bad debt.
Education. This is the most common among good debts. I know you are familiar how your parents borrowed money just to finance your education. This is because they are hoping for a greater return, which is visualizing their children succeeding in the future. The result could lead to a fruitful "investment".
Housing. Building or buying a home in cash might not be possible for many. But since this is a good venture, most people classified it as good debt. The feeling of security having your own home is greater than renting a flat or an apartment.
Whether it is a good debt or bad debt, it is important to pay as fast as possible. It’s not only because of the interest, but is easier to build wealth if you are debt free.
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