It’s hard to go through life completelydebt-free.
There are times when a person needs to borrow money whether it’sfor a home,college tuitionor an emergency.
Debt is often necessary and, in fact, it can even be good.
What’s considered good debt?
It may surprise you, but yes, there is good debt.
Good debt happens when money owed is tied to something that can increase in value, like a home.
“These assets can be tangible like a house or intangible like an education.
Here are some examples of good debt.
Mortgages
A home mortgage is a debt worth pursuing (so long as it makes financial sense.)
For example, it’s ill-advised to use home equity to pay for a vacation or a car.
What’s considered bad debt?
The worst kind of debt is associated with no collateral at all – like a vacation.
Here are some examples of bad debt.
Avoid these loans at all costs.
This is a good example of when borrowing against your 401K is a viable last-resort option.
Otherwise, protect your future and avoid tapping into your 401K.
Credit cards
Acredit cardcan be really helpful to your credit standing – andearn you rewards at the same time.
These credit card usage behaviors will decimate yourcredit scorefast.
A way to keep track of how debt can affect your credit score is with acredit monitoring service.
