It’s easy to fall into debt and find yourself owing a large amount of money to the bank or to credit companies. Some debt is bad for your financial position, but other debt can help you to accrue wealth.
Discover what sort of debt is healthy and what debt you want to avoid, with this guide from Yahoo! Finance.
Good debt
Debt can be good if it enables you to invest in something that will increase in value or at least maintain its value over time. This debt can help you to accrue wealth because the repayments will effectively be an investment. Short-term borrowing to avoid larger costs can also be beneficial if you know you can meet the repayments on time.
Bad Debt
The worst kind of debt comes when you borrow money from credit card companies so you can buy disposable objects that soon lose their value. This debt will attract high levels of interest and can become a financial hole in your pocket. To avoid this debt it is essential that you only ever borrow what you can afford to.
