Understanding the Difference Between Good Debt and Bad Debt: A 4 Pillars Debt Consultant in Victoria Chimes In
Not everyone realizes it, but there are two forms of debt: good debt and bad debt. Even if you’re aware the two forms exist, you may be wondering what the difference is. The answer is less straightforward than you might think, but a 4 Pillars debt consultant in Victoria can help you determine what the case is in your financial situation. We’ll go over the basics of what constitutes each type of debt and why it is classified in the manner it is.
Learning the Difference
The basic idea behind good and bad debt is that good debt is a type of debt that helps you grow your assets. That might mean a house, business, or plot of land. It also could be something like education which is not physical but can offer you higher wages and a better chance of success in the future. If the debt isn’t offering those things, it would generally be considered bad debt. This often applies to things like credit card debt, where the debt has grown from buying material goods or items that don’t qualify as an asset.
Good Debt Examples
While having no debt is the best option, this is unrealistic for most people. While categorizing good debt is personal, there are some things that most would agree fall under this classification. These would include things like a mortgage on a home, an investment loan, or a student loan. People will disagree about whether each of them is good, but in general, they offer a leg-up financially now or in the future. If you aren’t sure whether the debt you are taking on is worthwhile, talk to a 4 Pillars debt consultant in Victoria for expert advice.
Bad Debt Examples
Bad debt is the type that is used to pay for a service or product which is going to have no return on your finances. Instead, it just makes your finances worse. Part of this is related to the fact that with interest you’ll end up spending more on the item than you would have to buy it outright. Common debt considered bad includes credit card debt for automobile loans.
Need some assistance with your finances? You should speak with a 4 Pillars debt consultant in Victoria for assistance. You can learn more at www.4PillarsDebtConsultants.ca.