What is the difference between good debt and bad debt?

Concept: The debt which creates assets is a good debt and which does not is bad debt

Example: Mr. A buys a house on loan, this is an example of good debt because he has invested in appreciating asset. And at the same time Mr. B lakes a loan for world tour, that’s an example of bad debt. Accumulating depreciating assets, which is not going to increase your earnings or productivity, by borrowing money is an example of bad debt.

Suggestion: Be very clear and honest with the classifying the bad debt and good debt. It’s all about introspection. Because buying a car on loan can be a good debt for one person and at the same time be a bad debt for another.

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