Good and bad debt: differences

Having a good debt is something that can improve the personal finances of those who acquire it. In the same way there are others that harm their quality of life, these are known as bad debt . Although the ideal would be not to owe it to anyone, sometimes the debtor receives a valuable asset. Are you interested in capitalizing on your debt? Here we say how you can achieve it.

How is debt good and bad?

How is debt good and bad?

A loan boosts purchasing power , which means that it helps to obtain a benefit that we did not have access to. If we buy a good that will increase its long-term value as a house, or help generate income such as the purchase of machinery for a business, we are facing a good debt.

In general, it is frowned upon to borrow. However, there are situations that merit a decision in favor and should not have a negative result, as long as we are careful about what is invested.

On the opposite side is the bad debt. This is the result of investments that will generate a loss. This may be the purchase of items that will not increase their value and cause   a liability Which implies that they are only an expense, such as debts for appliances or clothing.

Good debt vs bad debt

Good debt vs bad debt

The problem with good debt is knowing what we are going to invest in. It has already been mentioned that a debt with an asset may be the purchase of a property, but not everything is material. Quality education is another possibility of positively paid debt, as this would allow us to be better prepared for a more competitive work environment and to help us increase our purchasing power.

On the other hand, bad debts are seemingly harmless expenses for smaller goods and in some cases less expensive than good debts. For example, an appliance will lose its value as it is occupied, and if it is not settled on time the cost of the product will increase.

A good debt will not have positive remuneration if the corresponding payments are not made, or the impact of interest rates is not valued. This happens with any credit or loan. Even a negative effect could be generated, if we neglect the cost of financing by these methods.

Debt with liabilities will never have positive effects on the personal economy, regardless of whether it comes from debts that were once considered assets. In addition, the effects of default may impair your record in the Bureau and acquire unpayable interest.

The debt from evil to worse

The debt from evil to worse

We still have to mention the worst of all debts, this happens when you are already in a bad debt that was not settled on time, therefore there are economic losses caused by interest, and you try to compensate the damage by requesting another loan to end With the first debt. The result: a very bad debt .

In these extreme situations, Solve your Debt can be a solution, because the program focuses on breaking the vicious circle of paying one debt with another, allowing you to settle with your own savings and clean up your history in the Credit Bureau.

Get into debt? Maybe it’s an option

Get into debt? Maybe it

Good debt is an example that borrowing does not have to end badly, sometimes it is necessary to reach the future we want. Getting a debt can improve or worsen our living conditions, so it is important to make an informed decision about our ability to pay and future needs .

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