💳 Not All Debt Is Bad — Here’s the Kind That Can Build Wealth

🟡 Wait… There’s such a thing as good debt?

Most people hear “debt” and instantly panic. Credit cards, late payments, ruined credit scores… right?

But here’s the truth: not all debt is the enemy. Some debt can actually make you richer — if you use it the right way.

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🧠 Good Debt vs. Bad Debt: What’s the Real Difference?

📘 Good Debt = An Investment in Your Future

Good debt is money you borrow that helps you build wealth or increase your long-term value.

It pays you back over time.

Examples:

• Student loans (when used wisely for valuable degrees)

• Business loans (if it fuels a profitable business)

• Real estate mortgages (on cash-flowing rental properties)

• Medical school debt (if you become a high-earning doctor)

Why it works:

The return is greater than the cost. If you borrow at 5% interest but earn 20% from the result, you come out ahead.

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🚫 Bad Debt = Paying More for Stuff That Loses Value

Bad debt is borrowing to buy things that:

• Go down in value (cars, clothes, gadgets)

• Don’t make you money

• Usually charge high interest

Examples:

• Credit card debt from shopping or eating out

• Payday loans

• High-interest personal loans for vacations or luxury items

Why it hurts:

You’re paying extra for stuff that gives you nothing back — and it often leads to a cycle of stress and minimum payments.

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🤔 So… How Do You Know Which Is Which?

Ask These 3 Questions Before Taking on Debt:

1. Will this debt help me earn more in the future?

(Education, tools, property, etc.)

2. Will this increase in value over time?

(Like a home, not a new phone.)

3. Can I realistically afford the monthly payments?

(Even if my income drops for a while?)

If the answer is yes to all 3 — it might be smart debt.

If not? Rethink it.

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💡 Quick Takeaway

💸 Good debt makes you money. Bad debt drains your future.

Debt isn’t just about interest rates — it’s about what you get in return.

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🔍 Real-Life Example

Bad Debt Example:

Anna bought a $1,200 phone using her credit card and didn’t pay it off for a year. With 20% interest, she ended up paying $1,400+ for something that was worth $500 by the end.

Good Debt Example:

Jason took out a $10,000 loan to buy equipment for his landscaping side hustle. It helped him book $30,000 in jobs within a year.

Same idea: borrowed money. Totally different outcome.

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🗣 Your Turn

What’s one time you used debt the smart way — or one mistake you wish you could undo?

Share this with someone who’s scared of all debt — and help them see the difference.