DEBT
October 25, 2024
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DEBT
What is Debt
Debt is money borrowed by one party from another. In a debt-based financial arrangement, the borrowing party gets permission to borrow money under the condition that it must be paid back at a later date, usually with interest.
Types of Debt
Good debts
Bad debts
Good debt vs. Bad debt
Good debt – typically has a lower interest rate, something you believe will grow in value over time (house, business, education), helps increase your credit history and is within your budget.
Bad debt – typically higher interest debt, not backed by a value increasing asset (automobile, credit cards), unplanned within your budget and can negatively impact your credit score.