Here’s why you shouldn’t be afraid of debt!
Not all debt is created equally. Some debt can be used to invest in yourself and your future, which can help level up your finances.
When you think of good debt, think of things like a student loan, mortgage or a business loan. Those are investments in your future that can give you a valuable return. The key is to make sure that you’ll be earning more from your investment than it will cost you to pay back the loan.
For example, if you take out a business loan that costs you $500 a month to pay back, but because of the equipment you bought with the loan, the business will now earn $5000 a month… that’s good debt! That’s called leverage, and wealthy people use it all the time!
But if you’re using debt to go to fancy dinners and floss with bottles of champagne in the club, that’s bad debt. You’re not getting any return from that, other than a good time right now.
That’s not to say you can’t put these expenses on a credit card, but only if you’re actually able to pay it off before the interest starts piling up. We’ll talk more about how to use credit cards to your advantage, so make sure you’re following for more tips!
The key is to make debt work for you and not let it spiral out of control. Learn how here.