Good Debt vs. Bad Debt

People often assume that debt is a bad thing.

But not all debt is bad debt. Debt can be a good thing – if and ONLY if, it is debt which is paid by others.

What exactly does that mean?

Getting into debt with a plan to use it as a source of income is a smart way to increase your passive income. For example, I own a home (with a mortgage), but I don’t pay that mortgage. A renter does, plus I make a bit of profit each month.

Essentially, the bank paid for me to make money. They lent me money, which I then used to make money. It’s a win-win-win situation. The bank gets paid back with interest each month, I get another stream of passive income, and my tenant gets a beautiful home to live in.

The only kind of debt you should allow yourself to get in, is debt that will make you money. Otherwise, it’s just a financial burden.


-Sheri

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