Debt The Good Debt and the Bad debt

[raaman]

If defined simply, debt is an amount of money that you borrow from other parties to meet various needs or existing needs. When you borrow or owe there will be an interest expense that must be borne outside the principal of the debt you borrow.

This means that there are greater expenses that must be paid, when you are in debt than when buying goods in cash. When viewed from the explanation above, the debt that is owned looks bad.

Bad debts should not be owned to meet various needs. However, is all debt really bad? You need to know about two types of debt, namely good debt and bad debt or what is often known as productive debt and consumer debt.

 

[Good luck]

The good debt is the money you are able to recover from the person you lend the money to after a particular period of time given while the bad debt is the money you will find difficult to get from the lender due to some issues that might have happened to the person in the course of doing a particular business

 

[Abigael]

In my understanding, bad debts are those that you take for your own impulsive spending. Without even making a plan on how you will pay it back. This can put you in so much financial trouble. While the good debt is one you take with a plan. Maybe for a business or an emergency but you have a good plan on how to pay it back.