Bad Debt vs. Good Debt

Let's talk about bad debt and good debt. What can be good debt.

Now, a good debt is where you borrow the money, you're paying the interest. But you are using that money for investment

so it can compensate for your interest payment. Plus you get some residual income. That's good debt.

You can have even a million-dollar loan at five investment properties, and , whatever the rental income you have from those properties, it pays off the monthly payment. And then it gives you residual income. Plus you getting appreciation

for those properties. That's good debt.

On the other hand, bad debt is something. For example, you buy a brand new car and you know that first year at an average the car value depreciates like 25%. So that's a bad debt. When it comes to educating your kids or if someone you know or for yourself also, or someone young who is thinking of buying a brand new car or buying a property, definitely buy a property, because when you buy that car, it's going to depreciate the value.

But again, know the difference between good debt and bad debt. Understanding the good debt and the bad debt and borrow money for the good debt. Hopefully this information is going to help you to make your financial decision.

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