The Power of Debt: Understanding Good Debt vs. Bad Debt

💰Not all debt is bad. Good debt puts money in your pocket, while bad debt takes money away.

💡Cash flow is crucial when utilizing debt. If the money is flowing in, it's good debt; if it's flowing out, it's bad debt.

🏠Owning rental properties can be a form of good debt, as the rental income puts money in your pocket.

🚗A car is typically a liability, as it takes money away from you. However, if you rent it out, it can become good debt.

🎓Student loan debt is often considered bad debt because it's a liability that doesn't generate income.

What is the difference between good debt and bad debt?

—Good debt puts money in your pocket, while bad debt takes money away. It's all about cash flow.

Can credit card debt be considered good debt?

—It depends on what you spend the money on. If it generates income or builds assets, it can be good debt. If it's used for unnecessary expenses, it's bad debt.

Is owning rental properties a form of good debt?

—Yes, owning rental properties can be a form of good debt because the rental income puts money in your pocket.

Why is student loan debt often considered bad debt?

—Student loan debt is often considered bad debt because it's a liability that doesn't generate income.

How can I use debt wisely?

—To use debt wisely, focus on cash flow. Make sure the debt you take on puts money in your pocket rather than taking it away.

00:00Debt can be a powerful tool when used wisely. Understanding good debt vs. bad debt is essential.

03:10Cash flow is key when utilizing debt. Good debt puts money in your pocket, while bad debt takes it away.

08:00Owning rental properties can be an example of good debt, as the rental income generates positive cash flow.

10:30A car is typically a liability, but if you rent it out and generate income, it can become good debt.

12:50Student loan debt is often considered bad debt as it's a liability without income generation.