Good Debt And Bad Debt: Is There A Difference?

If you were to compare how the average person handles their money today, compared to how they did a century ago, you would find one very major difference. People a century ago borrowed next to no money, some of them even thought doing so was a sin. Now today we borrow money for purchases as low as a dollar. We borrow money for homes, automobiles, furniture, vacations and the like. Whether it be good or bad, debt is everywhere and it is a major part of our financial lives.

It’s pretty much genuinely understood that having too much debt is definitely a bad thing. You will be paying extremely large interest rates and very likely to be unable to pay it off. This will force you to sell a bunch of assets to pay off the debt, or file bankruptcy which a gut-wrenching painful experience. Some people who have large amounts of debt are in denial, and just say that debt is a part of our culture and they need it to live.

There is another group of people that will have a tendency to borrow some money, such as on a home, and claim that owing the bank money is actually financially a very wise move. They will tell you that their home is an asset which is appreciating, it is an investment. They will tell you that they are leveraging, and making use of other people’s money. Others will borrow money at 0% on a credit card and put it in a savings account at 5% and keep the interest, the will also claim that this is good debt.

These people believe that they are financially wise because they are only using good debt, and avoiding bad debt. They consider bad debt to be things such as pay-day loans, credit card debt, automobile loans, and the like.

People who claim that there is such a thing as good debt really do not know what they are talking about. They completely ignore the factor of risk, which becomes involved whenever you borrow money. Does anyone really want to be in debt? Of course not! The best way to stay out of debt is to never get into it in the first place! Their good debt might work out for them if they do everything exactly perfectly, but that rarely ever happens. What if you lose your job and miss a payment? What if your home goes down in value? If you låna pengar med betalningsanmärkning och skuld hos kronofogden you have to be very careful and oriented about the details of the entire payment process so you won’t get confused in the future.

No matter how you are trying to sell yourself that you have good debt, you really don’t. There is no such thing as good debt. You are in bondage to someone else as long as you are in debt. It might look like you are just barely ahead on your balance sheet because you are making use of other people’s money, but the truly wealthy borrow next to money. The bible was right when it said, “the borrower is slave to the lender.”