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What are differences between the good and bad debt?

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Agung



Joined: 26 Jul 2008
Agung's page
Posts: 2



138 Magic Points
Subject: What are differences between the good and bad debt?
 
 Posted on Sat Jul 26, 2008 8:21 am  
What are differences between the good and bad debt?
please help me
citicredit.asia



Joined: 19 Jul 2008
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124 Magic Points
 
 Posted on Sat Jul 26, 2008 8:32 am  
Debt in and of itself is not a bad thing. Both of us were able to start our own businesses because of debt; Steve began his own law practice, and Azriela began her own entrepreneurial consulting business. So we understand what debt is and why some debt is great debt.

Debt that helps you, enriches your life, is manageable, and is not a burden can be called good debt. For example, student loans are good debt if they enabled you to get through school and further your life goals. They are bad debt if you dropped out of medical school after one year to become a writer. A good debt helps; a bad debt hinders.
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SunDevilsFan



Joined: 09 Nov 2007
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6612 Magic Points
 
 Posted on Sat Jul 26, 2008 11:40 pm  
In a nut shell....

Credit Card Debt is a Bad Debt....

School Loans and house loans can be considered Good Loans
fireyone



Joined: 26 Feb 2008
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127 Magic Points
 
 Posted on Mon Jul 28, 2008 2:58 pm  
Pretty good explanations here. I perfer no debt at all but these days that is next to winning the lottery.
JPolito830



Joined: 21 Jul 2008
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Location: Richmond, VA


908 Magic Points
 
 Posted on Mon Jul 28, 2008 3:40 pm  
Yeah you should have some debt though...Some debt is always a good thing, since it will help you build credit and secure larger purchases in the long run. But CC debt is not good debt.
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erb1953



Joined: 31 Dec 2007
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-53 Magic Points
 
 Posted on Tue Jul 29, 2008 2:10 am  
D E B T is a four letter word!!!!!!!!!!!!!!!!!!!!!!!
fireyone



Joined: 26 Feb 2008
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Posts: 4285



127 Magic Points
 
 Posted on Tue Jul 29, 2008 12:12 pm  
Jp is correct about having some debt. You need to establish credit because low and behold somewhere in your long life you will need it. Especially in home and car purchases. Plus we all know that some employers use it as well as utility companies.
anthony

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Joined: 31 Jul 2006
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13571 Magic Points
 
 Posted on Wed Jul 30, 2008 7:40 am  
yes, I too think JPolito is right. A debt which will helps you to build up a good credit history is a good debt since it adds to your credit score. It is good so long as you are able to repay the debt on time. But from the moment you become delinquent, it becomes a bad debt, as this gets listed in your credit report and lowers your credit score.
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Mary

Mary

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 Posted on Wed Jul 30, 2008 9:07 am  
I think that pay day loans may be considered as a bad debt as they come with a very high interest rate which people sometimes cannot afford to pay and end up in debt circle. Any loan which you cannot afford to pay becomes a bad debt and gets listed in your credit report lowering your credit score. But if you can repay a debt on time, no debt is a bad debt.
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sdchargers_63

sdchargers_63

Joined: 13 Aug 2007
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1356 Magic Points
Subject: debt
 
 Posted on Wed Jul 30, 2008 9:58 am  
About PDL's. Even if you can't pay the PDL back, and it turns into a 'vad debt', ALOT of PDL's aren't put on your credit. Some of the CA's that 'represent' the PDL companies may go on your credit. But...PDL's are a story in itself.
fireyone



Joined: 26 Feb 2008
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Posts: 4285



127 Magic Points
 
 Posted on Wed Jul 30, 2008 11:55 am  
I just read an article about PDL in last nights paper for PA residents. They are by Feb1 of next year (at least for PA residents) going to have to be licensed and only allowed to charge so much interest. This will apply to internet lenders and out of state lenders. Score a point for the good guys.
CMBV22

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Joined: 08 May 2008
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Posts: 364



4810 Magic Points
 
 Posted on Wed Jul 30, 2008 8:09 pm  
Anothonys explination is perfect. Any debt that helps you by building credit I.e a home or auto loan or CC is good debt.

Any debt that hurts you, anything in default that is harming your score or you cant afford is bad debt
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fireyone



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127 Magic Points
 
 Posted on Thu Jul 31, 2008 1:53 pm  
anthony usually gives some pretty good advise.
Justin

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28942 Magic Points
 
 Posted on Mon Aug 04, 2008 11:15 am  
I agree with Anthony but would like to add a few more points. If you buy a house with a debt, I think, it is a good debt because in future you may be earning from it. I consider it as a good debt because when you borrow money for purchasing the apartment, you get tax deductions too and the value of the property appreciates over time and in future you may sell it at a much higher price. But if you purchase a car or a luxury item with debt, it becomes a bad debt because the value of the good depreciates over time.
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goodnatured



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10 Magic Points
 
 Posted on Mon Aug 04, 2008 9:15 pm  
Good points Justin, so we should only be investing in what will increase it's value in time.
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