Debt is one of those things that you will almost certainly have to deal with at one point or another in your life. And, if you’re like most people, it will be something you have to deal with throughout life. Can you envision debt freedom or are you resigned to having debt?
Mortgages, credit cards, student loans, auto loans, the list of things that can add to your debt, are endless.
Good debt vs. bad debt
I’ve seen it said where some debt is considered good because it is tied to something that provides positive value. The two types of debt most commonly associated with this are mortgages and student loans.
A mortgage is tied to an asset that typically appreciates in value over time. Obviously what happened with housing prices recently is a glaring exception, but for the most part, homes will appreciate in value over time. So, if you buy a house for $200,000, take out a $160,000 mortgage, the idea is that the house appreciates in value while you pay off the mortgage. With the numbers I just listed, you would start off with $40,000.