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I've seen many sides of the debate on whether certain types of debt can be seen as good or not.  Obviously, from the title of my post you know where I stand on the issue, but let me explain why I feel that there is no such thing as good debt.

mb-checkbook201308Traditionally, debt gets categorized into good and bad debt.  Good debt has been identified as things like:

  • Mortgages – Good because you have a house to live in and (until the last few years) an asset that was more often than not worth more than what you owed on it.  Stability and comfort all played a role into identifying this as good
  • Student loan debt – Having a student loan most often meant that you went to college, which meant that you were able to increase your earnings potential, so student loan debt was often seen as an investment, so to speak, into future earnings. Positive investments are good, right?

I don't disagree that those two items (and maybe others) have merits, but I still can't see them as good debt no matter how you look at it.


One simple reason:

Debt in itself is not good.  Debt means that you owe somebody money.  Plain and simple, that sucks!

I might accept that those are ‘neutral' debt or ‘OK' debt, but the fact that I owe somebody money can never be classified in other things that I consider good, such as:

  • That's a good looking Corvette!
  • I had a good time at your party.
  • Good dog!
  • You owe us some good money!

See how it kind of fell apart there at the end?  🙂

So, there's my thought on why no debt can ever be good debt, no matter what good comes from it.  I'm not saying you should avoid it, because having a mortgage and getting an education might just be the best things you can do.  I'm just suggesting to separate the good part of that from the not so good debt that accompnies it.

What are your thoughts on ‘good' debt?