Good Debt
Good debt is an investment in something that will go up in value when it’s paid off.
For example, if you want to buy a house and need a mortgage for the down payment then the good debt would be using your credit card to make the initial purchase. Once the bank loan is approved and you have bought your house, then good debt becomes bad as your house loses its value due to inflation or interest rates increasing over time (or both).
Bad Debt
Bad debt is an investment in something that by design goes down in value. For example, you might buy a car and then drive it until the engine falls out. The same thing happens with houses and other investments.
Good debt is an investment in something that will increase your net worth over time (or at least doesn’t go down). Buying a house is good debt because it’s an asset—you’ll make money as long as your home appreciates, which means you can sell it for more than what you originally paid for it!
Bad debt isn’t always bad: sometimes we need to borrow money to get back on our feet after getting fired or losing our job due to downsizing or outsourcing jobs overseas, but those instances are exceptions rather than the rule of thumb when deciding whether or not borrowing money from friends/family members would be beneficial for their financial health
In the end, good debt is an investment that will make you money. Bad debt is an investment that will lose you money if it isn’t paid off right away.