Good Debt vs. Bad Debt

How is debt defined?

• Money someone owes you
• Money that is owed
• Money that will increase in value over time
• Money that will decrease in value over time

Which of the following is an example of good debt?

• Buying a car
• Buying a bike
• Buying a bus pass
• Taking out a student loan to pay for postsecondary.

Is debt ever a good thing?

• Yes, because some kinds of debt are associated with  appreciating assets
• No, it is never good to owe money

What is bad debt?

• Bad debt is when you pay a high percent you pay on the loan is high
• Bad debt is money you owe that is associated with depreciating assets
• Bad debt is owing any money

Are student loans generally an example of good debt or bad debt?

• Good debt
• Bad debt

When might student loans be an example of bad debt?

• When you have to borrow money to pay for tuition and books
• When you borrow more money for college than you need
• When you borrow money from the government

Why are student loans genearlly considered good debt?

• You learn a lot in college
• Taking on student loans to obtain a higher education often results in your landing a better career and therefore increasing your earning potential
• You meet great people in college
• The cost of college is decreasing

Is business debt an example of a good or bad debt?

• Good
• Bad

Which of the following is an example of bad debt?

• Buying a car with a loan
• Buying furniture
• Carrying money over from month-to-month on a credit card
• All of these are bad debt

Why is it important to pay off the entire credit card balance after 30 days?

• If you do not, you will have to pay interest on top of what you owe
• The credit card companies will suspend your account
• Your interest rate will increase
• It is not important to pay off your entire credit card bill each month