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Is there such a thing as good debt?

December 20th, 2005

Usually when one says they have debt this is taken as a negative. However, there could be more to this debt than meets the eye.

Not all debt is alike—and not all debt is bad. It’s very reasonable to carry a mortgage or a car loan. What is needed is that you pay attention to the cost of the debt. If you have a revolving debt on a credit card that’s charging you 18% per year, you’re in a bad situation. If your student loan is costing you 6% per year, that’s not as worrisome.

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