Contrary to popular belief debt can be a good thing! Many financial gurus or financial advice will tell you to steer clear of debt. Debt is when you borrow money from someone else or something else and pay back the borrowed money plus interest. Most of the time when someone goes into debt they borrow money from the bank but you can also go into debt by borrowing from someone else like family or friends. This type of debt is called consumer debt. You do not want to rack up consumer debt! The good debt you can look into would be investment debt. This is the type of debt where you borrow money and make payments on that money, same as consumer debt, but this time you will make money back from your investment. You can make your money back month after month, each quarter, each year or when the investment sells or liquidates. For example, you can look at purchasing a home as good debt. You will borrow money from the bank to purchase your home and you will make month mortgage payments for 15-30 years. Now, you can make money either when you sell the home for more money than what you purchased for it or you can rent it out and make a monthly profit off it. Keep in mind, now that you would be a homeowner, you will also have to maintain the home and fix anything that breaks. This would be a downside you would have to consider before making the investment. You can also purchase a commercial loan. This type of debt is where you borrow money specifically for a business. You can purchase a laundromat, car wash or vending machine. You will still make monthly payments back to the bank but you will be making money from the loan you borrowed. All these are examples of good debt. Yes, debt can be a bad thing but if you think about what you are using the money for and leverage that money you can make the money work for you!
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