Debt often gets a bad rap, and for good reason—especially when it spirals out of control. But not all debt is created equal. In fact, some types of debt can actually help you build long-term wealth when used strategically.

So, how do you know what’s helpful and what’s harmful?

Let’s break it down.

The "Good" Kind of Debt

Good debt is the kind that helps increase your net worth or generates long-term income. When managed responsibly, it can be a smart financial tool:

• Student Loans: Yes, they’ve been controversial—but education often leads to better career opportunities and higher earning potential. When your degree pays off, the loan makes financial sense.
• Mortgages: Buying a home often means investing in an appreciating asset. For many, it’s one of the largest contributors to their net worth over time.
• Business Loans: Starting or expanding a business can be risky, but with the right planning, it can also create long-term financial growth—not just for you, but possibly for your children too.

The "Bad" Kind of Debt

Bad debt, on the other hand, often finances short-term wants rather than long-term needs. It can quickly become a burden that eats away at your income.

• High-Interest Credit Cards: Making only minimum payments while the balance accrues at 20% or more? That’s a fast track to financial stress.
• Payday Loans: These short-term loans come with sky-high fees and interest rates. They may seem like a quick fix, but they usually lead to bigger problems down the road.
• Financing Luxury Items: Whether it’s a new boat, designer clothes, or the latest smartphone—financing these on credit can mean you’re overspending on things that won’t hold their value.

Smart Strategies for Using Debt Wisely

1. Only borrow what you can afford to repay
   It sounds simple, but it’s easy to forget in the moment.
2. Prioritize low-interest debt that builds future value
   Think: home loans or education, not credit cards for concert tickets.
3. Avoid carrying balances on high-interest credit cards
   If you can’t pay them off monthly, reconsider the purchase.
4. Have a solid repayment plan before borrowing
   Know how and when you’ll pay it off before you say “yes” to the loan.

Final Thought: It’s Not Debt That’s the Problem—It’s How You Use It

Used thoughtfully, debt can be a steppingstone instead of a stumbling block.

So if you're navigating your own borrowing decisions—whether you're considering taking on a loan or trying to get out from under one—we're here to help. And if this got you thinking, feel free to share it with someone else who might benefit from the conversation.

Let’s keep money working for you—not against you.