What is debt? according to wikipedia, Debt is that which is owed; usually referencing assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
The word "DEBT" mostly scare people, because lots of them think that is bad. Really? Debt will only be "bad" if people do not realized the high interest rates. But not only the high rates it also the way you spending your money. Some debts are bad but sadly essential. All automobile and car loans fall under the bad but essential debt category. The value of a vehicle depreciates the moment it hits the road. Also, it costs money to run and maintain it. Fuel, car servicing, road tax and car insurance are just some of the things that a car owner has to pay for regularly.
Some good debt that you may know :
The word "DEBT" mostly scare people, because lots of them think that is bad. Really? Debt will only be "bad" if people do not realized the high interest rates. But not only the high rates it also the way you spending your money. Some debts are bad but sadly essential. All automobile and car loans fall under the bad but essential debt category. The value of a vehicle depreciates the moment it hits the road. Also, it costs money to run and maintain it. Fuel, car servicing, road tax and car insurance are just some of the things that a car owner has to pay for regularly.
Some good debt that you may know :
- Loans for investment shares. shares are income-producing assets. However, loans for shares should only be taken out if bad debts have been paid off. Other things to consider include the possibility of rising interest rates and falling prices of property and shares.
- Student loans. Student loans are considered good debts because they help finance young people’s education. A good education is a wise investment as it often guarantees better jobs with higher paychecks.
- Home mortgages and property investment. Home loans and mortgages are good debts as well. Homes are assets that increase considerably over time. Very often, a house bought today has the potential to double or triple its value in the next 20 to 30 years, depending on the location.
- Business loans. Business loans can be used to start a business or expand an already established business. If the business is run successfully, the loan will eventually help increase profitability and improve services and products.
The point is you know how crusial for you to make good debts instead of bad debts
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