Debt Can Be Good
April 6th, 2007 by Remon
Since you were a baby you’ve probably heard a thousand times that debt is bad, period. Although debt is bad in many cases, like creditcard debt, debt can also be good.
Bad Debt
Bad debt is debt that doesn’t make you money. Creditcard debt for example. You probably pay around 17% interest a year on your creditcard debt, and you don’t earn a penny from it.
Good Debt
Good debt is any debt that makes you money. Say you take a $10,000 loan with a 5% interest rate, and you use that money for some investment that makes you a 10% return. You just earned $500 by using someone else’s money!
There are a few pitfalls though, your investment may go wrong and you may end up with a loss. Only do this if you know what you’re doing. If I use myself as an example, I could buy $10,000 worth of snakes at a good price and sell them retail within 2-3 months. I know what I’m doing and I’m sure I could make a nice profit.
Remember, nobody became wealthy without taking any risks. The above doesn’t neccasarily has to be something for you, but to become wealthy you will have to take some risks someday.