25 Jan Myths vs. Truths – The Truth About Good Debt vs Bad Debt
Good Debt vs Bad Debt: Exposing the false beliefs of the financial world
Myth: There is good debt and bad debt. You should use good debt to your advantage and avoid bad debt.
Truth: There is no such thing as good debt.
It’s true. There really is no such thing as good debt. The truth is all debt has risk, and all debt is better for the lender than the borrower. The lender makes money by loaning you money. If it wasn’t highly profitable, there wouldn’t be so many banks loaning out so much money, would there? Ever notice how the banker’s solutions to all your problems involve borrowing more money? Think about it for a minute. When you want to remodel the house, they’re ready with a home equity loan. When you want to get a different car, they’re ready with a car loan. When you want to get married or have a big event in your life, they’re ready with a signature loan. When you are struggling to make ends meet because you have too much debt, they’re ready with a debt consolidation loan to help you go deeper in debt!
It’s awfully convenient for the banks to loan you more money at every turn, but it’s a no win situation for you. I know some prominent bankers and financial folks who are neck-deep in debt because they are more worried about impressing people with their “good debt” than with avoiding risk and having power over their money.
Forget what the banker says. Your most powerful wealth-building tool is your income. When you are bound up by debt you can’t use your income to work for you. The only sure way to build wealth is to stop borrowing money!
– Matt Wegner
Matt Wegner is a personal finance, career, small business and leadership coach focused on teaching his clients the tools for L.I.F.E. (Living In Financial Excellence). Learn more about Matt at www.financialexcellence.net