Debts are generated through various sources but we can describe the kinds as two - basically Bad debt and Good Debt. Debt used for consumption is a luxury. Debt used for business is a necessity! You are building something and enjoying the write off.
Good debt is still stressful but if you are smarter about it, you are managing it. Good debt allows you some freedoms that bad debt will never allow. If debt is used to increase your productivity at the office or invest in something with a large potential return, then you may be on the beach somewhere reaping the rewards. Good debt usually provides tax relief or can allow tax relief. Good debt usually comes with a sense of satisfaction and the joy of it can return a thousand fold. The newness can wear down but you smile every time you think about what it is doing for you or your business. Good debt rarely comes with buyer's remorse after the purchase. Good debt will increase your net worth in what you are trying to achieve. Good debt is usually tied to production of a business or personal finances.
Bad debt is debt that generally drags you down. It is a self prison that you put yourself into. The scenario goes like this- Bad debt usually comes with buyer's remorse as it was a whole lot of fun for a day or two then all the romance goes away. What was once new is now old and it doesn't derive the same feelings for you anymore. Bad debt is not productive.
For your home uses that are consumer product driven, I suggest paying cash. Once you have bought it you own it. For business or financial purposes, it is ok to use debt to make money. Using other people's money at a small price is smart. Why tie up your own cash if you don't have to. Do not get sucked in by retailers who make it so attractive to open up a charge card and even give you a discount on that first purchase. Research has shown that once they get you started on charging, you will continue. Be stronger and be smarter in how you deal with your debt, as the rewards are great. I hate charging anything I will eat, sit on, sleep on, or watch that is located in my home. I do not mind charging or financing anything for my business if it is a necessity for making more money. Your dollars will actually go further if you pay cash for bad debt items and charge or finance good debt items. Have a visa and a million dollar idea? Why not take a chance and put your card to work?
Good debt is still stressful but if you are smarter about it, you are managing it. Good debt allows you some freedoms that bad debt will never allow. If debt is used to increase your productivity at the office or invest in something with a large potential return, then you may be on the beach somewhere reaping the rewards. Good debt usually provides tax relief or can allow tax relief. Good debt usually comes with a sense of satisfaction and the joy of it can return a thousand fold. The newness can wear down but you smile every time you think about what it is doing for you or your business. Good debt rarely comes with buyer's remorse after the purchase. Good debt will increase your net worth in what you are trying to achieve. Good debt is usually tied to production of a business or personal finances.
Bad debt is debt that generally drags you down. It is a self prison that you put yourself into. The scenario goes like this- Bad debt usually comes with buyer's remorse as it was a whole lot of fun for a day or two then all the romance goes away. What was once new is now old and it doesn't derive the same feelings for you anymore. Bad debt is not productive.
For your home uses that are consumer product driven, I suggest paying cash. Once you have bought it you own it. For business or financial purposes, it is ok to use debt to make money. Using other people's money at a small price is smart. Why tie up your own cash if you don't have to. Do not get sucked in by retailers who make it so attractive to open up a charge card and even give you a discount on that first purchase. Research has shown that once they get you started on charging, you will continue. Be stronger and be smarter in how you deal with your debt, as the rewards are great. I hate charging anything I will eat, sit on, sleep on, or watch that is located in my home. I do not mind charging or financing anything for my business if it is a necessity for making more money. Your dollars will actually go further if you pay cash for bad debt items and charge or finance good debt items. Have a visa and a million dollar idea? Why not take a chance and put your card to work?
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