How the heck can any debt be good? To me, it can't. If we're really talking about debt. Let me explain.
The other day I saw a segment on TV talking about "good debt" and "bad debt". I've heard those terms over the years, so the concept is nothing new.
But I don't think there is ever anything that could be called "good debt".
I'm not saying its wrong to borrow money. That's how many people go to college, buy a business, and own a home. All are ok. But I don't think of that type of borrowing as "debt". I think of those as more of an investment. As in using the money to buy something that can build in value or usefulness over time.
I know, call me picky, we're just talking semantics here, right?
To me, debt is different than borrowing. Debt is borrowing money from a position of weakness. And buying something (that you really can't afford) without any long lasting value. Debt usually just grows and grows. And you get nothing good out of it - unless you call delaying payments as something good.
Here's a story from my day job. I work at small university. Since college is admittedly SO expensive, many students borrow money. This way they have some time to pay it back once they start their new career.
One day a graduate came in and asked if we offered any advanced majors in his field of study. He was looking to stay in college as long as he could. So he could keep delaying his payments. And this person wasn't a young student just starting out. The student was a working professional in their 50's!
So, borrowing money for school is ok. Borrowing more money just to delay payments, that's debt. And it isn't "good debt" in any way!
Calling any debt "good" just sends the wrong message, plain and simple. And gives people the idea that they can just use their credit cards or borrow money in other ways without a plan to pay them back:
"Oh, I'm buying a flat screen TV, and that's good debt because our family likes watching TV." Wrong. Wrong. Wrong!
Sure, sometimes you get a good deal with 0% financing and you can pay it back over time with no penalty, and no interest builds up. That's a little different, assuming you can actually pay it back BEFORE the 20% interest kicks in.
And if you borrow money to start a business or go to college, you are using that money to "build" something. And those are all good, too.
But I don't consider that debt, I consider that investing.
So to me, there is no such thing as "good debt". Ever.
Not that you should never use a credit card to buy a new TV. Just don't get into the habit of calling it "good debt". And don't look at borrowing for college as "good debt". Call it something else, like "investing for my future". Otherwise when times get tough, you might have a hard time drawing the line between the two. And too much good debt will simply become too much debt, and you'll come to website like this looking for help.
If you borrow money to buy extra clothing or a flat screen TV, things you WANT but don't really NEED, that's bad. You can never get any real value out of these things. And they can only get you into trouble over time.
There's no real honor being on Oprah or some local TV show trying to justify "good debt" vs. "bad debt". Debt is bad. Always.
Do you agree with me? Or am I just being too picky with the words "good" and "bad"? Let me know below.