1. I agree with these, although there are certain situations where any of these debts could be good or bad. For example, when someone takes out 100K in student loans to earn a Master’s degree in Liberal Arts! =)

    • I totally agree with that. There are definitely situations where the so called “good debt” are a baaaaad idea. Your example is one of them.

  2. Agreed! And, I also agree that debt doesn’t have to be a part of life. It’s totally possible to live debt-free (or with just a mortgage). I also agree with Holly–I don’t think all student loan debt is good. I do think a college education can be a good thing, but not at the expense of your long-term financial health.

  3. I try to avoid labeling debt when I can, although I don’t disagree with how you’ve labeled them. The reason I try to avoid good or bad is because people particularly hold onto to the “good” label. To me, debt is debt. I’ve seen lots of people get something into financial trouble with “good” debt because they didn’t due their due diligence. They didn’t assess the risk and make sure it was not only reasonable but didn’t have a plan in place in case something happened. They assumed because it was “good” that it was safe. And that is not necessarily true.

    • You’re right, Shannon. Labeling them as good is probably not the right approach because of the reasons you have stated. I just wanted to make a distinction that some debt are clearly worse than others. But agree that all debt should be treated the same.

  4. I am with Shannon, I don’t typically label debt good or bad. I may argue that student loan debt is bad especially if you could have gone to a cheaper school or taken out less and far as cost of living, etc. I just think that people need to be smart about how much debt they take on and how they manage it. Debt can be a strategic part of your financial plan but only if you are smart about it.

    • Agreed. I don’t think it’s smart for people to go into debt just because they want to go to a particular school, when a cheaper school offers the same classes.

    • You’re going to be so happy when you pay off all your credit cards… I know I was. Now I just have to finish the student loans and I’ll be jumping up and down with joy.

  5. After my student loans are gone, I’ll only go into debt for a home (of course after putting 10-20% down). I don’t see the point in having any other debt whatsoever. I hope that my planning ahead will eliminate the need for my future children to need student loans – I wouldn’t want anyone to have to go through what I’m going through with that kind of debt!

  6. Right now all of them are bad for me. I am just so looking forward to paying them off… and hopefully I can get into a “good debt” someday and own a house also!

  7. Home, car, education. That is it. We have even been able to avoid car and education luckily which helped us get a great start in our financial life. My company runs on a cash only philosophy. We have studied whether it would be worthwhile to take on debt to expand faster than what we can do naturally. It looks great on paper, but we’ve been a great company for 30 years so why mess it up so we’ll continue to grow at our natural rate.

  8. Totally agree. Good debt are ones that can increase your earning potentials. Any other debt should be considered as bad debt.

  9. Yeah, labeling debt is kind of a foolish endeavor, because of the distinctions you draw. Not all debt is bad, and some may be beneficial, depending on the circumstances. That’s something I think many anti-debt people tend to forget: if used intelligently, debt is just another tool in our arsenal, not the big bad monster we often pretend it is. Good read!

  10. Out of these I would only say a home loan is potentially good. I can count the number of times I’ve heard people’s student loan stories…about how they have all this debt for a degree they can’t use. Better to not go to school for a time, get a job and store up cash than attend right after high school using debt, imo. And I’d definitely find a way to start my business small with very little start up costs. Entrepreneurship is extremely risky and I wouldn’t want to be saddled with thousands in debt if I failed for some reason. Great post!

    • You’re right, I think you should get a college education without having to go into debt, but I’m also not opposed to it – within reason.

  11. I’m mostly on board with this post too, as long as you know what you’re getting a student loan for and have a plan to get in and out as fast as possible. It’s a similar situation to getting a small business loan to me. You wouldn’t start a small business and take out a six-figure loan with no real plan to pay it back (the bank probably wouldn’t give you a loan either). But, that’s what many people are doing with their education currently.

    On a small side note, I do have a credit card I use regularly for all my online shopping. I’ve had too many issues with processing accounts and online subscriptions for me to be giving out my debit card number online. It seems like every other week some large company has an entire bank of credit card numbers stolen. At least if someone steals my credit card number, they won’t be stealing my money.

  12. I personally financed the purchase of a business with a loan in the past and I never looked back. The loan was paid off within a couple of years during which time I was earning a decent income from the business and I then sold the business a few years ago for more than I paid for it as it had grown over the years I owned it. So I totally agree, borrowing to start or buy a business can certainly be a good thing.

  13. While there is really no way to save enough for college in any real substantial way on a high school diploma (as income levels of the uneducated are really sad), it can be really great for applying for financial aid. Take the time to establish that you’re an independent adult and you don’t have to list the income of your parents on your forms. Not to mention, so many teens have no idea what the world is like. Having to live on a low income can really be eye-opening. Even so, student loans are nearly a requirement now, even for technical schools. 🙁 So, I guess they’re not really “good” but more “necessary” to my mind.

  14. I don’t like any of my debt so I’ll call it all bad;0) The mortgage is the one debt I’m the most okay with. I’m hoping our kids don’t have to accrue a bunch of college debt … It’s unbelievable the debt that people have accumulated earning their degrees.

  15. Nicely stated. I’m from the school of thought that believes there is no such thing as ‘good’ debt. However, I would agree that some debt is not as bad, as onerous, as other types of debt.

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