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Not all debt is bad

Category: Manage Debt Published: Monday, 04 July 2016 Written by Chance Allen

Debt has gotten a bad rap lately, and for good reason. Recent NerdWallet data show that the average US household with debt carries $15,762 in credit card debt and $130,922 in total debt, with the average consumer spending more than $2,500 a year on credit card interest. A number of well-respected financial self-help gurus even tout programs that advocate a cash-only, debt-free life.

So, should sensible people say no to debt? Probably not -- because not all debt is bad. If you manage debt in a smart, planned way, you can exploit it to increase your wealth rather than let it use and deplete you.

How debt works

In simple terms, borrowing money is like paying for any kind of service. You pay to have a person to clean your house or fix your car, and when you borrow money, you pay for that service as well.

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