Is All Debt Bad? Insights From Debt Consultants In Victoria

For many consumers in the Victoria area, the concept of good debt may seem impossible. However, debt consultants, as well as other financial professionals, do see debt as either a good type of debt or as a bad financial decision.

Good Debt

A simple and straightforward definition by debt consultants is that good debt adds to the overall net value or worth of the individual. This is not the same as high risk types of speculation where a stock may, at some point in time, increase in value, or it may result in a loss of value.

Instead, good debt is purchasing or investing in something that will generate some type of income or provide a reasonable expectation of increasing income or earning potential.

An example of good debt is a student loan to obtain a degree or to become trained in a trade. Another example would be investing in a home, but only if the home was within the price range reasonable for the income of the individual or the couple. Vehicle loans to be able to get back and forth are good debt, again with the vehicle selected falling into the right price range given the individual’s income.

Bad Debt

Bad debt is the reason most people in Victoria seek help from debt consultants. Bad debt includes purchases that do not add value, purchases outside of the repayment ability of the individual, or high interest rate purchases.

One or two bad debt items can often be negotiated and managed, but multiple bad debt issues become significant problems as interest, penalties, and fees quickly add up.

For assistance with any type of debt issues, call on the team at 4 Pillars Debt Consultants at 866-690-3328.