There is a big difference between good and bad debt. So what’s the difference?
Good debt: is debt used to obtain something that has the potential to increase in value. Like an: investment, mortgage loan or an asset that can improve in price or net worth. Another example of good debt is that it may provide some sort of tax benefit or advantage. Essentially good debt will put you in a better financial situation or give you the opportunity to grow in net value.
Bad debt: is when you buy something on your credit card and once the sale is complete the value drops significantly (like a television, car or clothes). You also end up paying more than the price you originally paid for the item because of the interest you are now paying on the credit card or charge. This ultimately creates a gap in value and price of the item.
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