Defining Differences between Bad Debt and Good Debt Whether your
debt is good or bad depends on the type of debt, the reason you
owe it, and whether you can afford to repay it. When used the
right way, debt can help you manage your finances more
effectively, leverage your wealth, buy things you need, and
handle emergencies. Debt can be a positive force in your life
when it helps you Build your family’s net worth — the difference
between the current value of your assets and the amount of debt
you owe. A mortgage is a perfect example. Good debt is even
better debt when the value of the asset you finance increases
over time. Buy something that will save your family money for
years to come. For example, you get a loan so you can weatherize
your home and lower your utility bills. Purchase something
important or essential to your life that you could never afford
to buy if you had to pay for it with cash. Examples of this kind
of debt include a car loan and a mortgage. Invest in yourself in
order to increase your ea