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Some debt isn't necessarily a bad thing | News

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Some debt isn't necessarily a bad thing

It's tough juggling debt, but not all debt is bad. There's some debt that can actually be a good thing.

Don't misunderstand; most of the time it's smart to avoid debt, but avoiding it at any cost isn't always smart.

Good debt includes anything you need but can't afford to pay for up front without wiping out cash reserved for emergencies. This includes buying a home, paying for college or financing a car. Just make sure you don't borrow more than you can afford to pay back and shop around for the best rates.

video In cases where debt makes sense, make sure you can easily afford the monthly payments.

Bad debt includes debt you've taken on for things you don't need and can't afford.

The worst form of debt is credit card debt since it usually carries the highest interest rates.

Don't use a credit card to pay for things you consume quickly like meals and vacations unless you can fully pay the bill in a month.

Experts say your total monthly debt payments, including your mortgage and credit cards, should not be more than 36-percent of your gross monthly income.


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