[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/rkillen.ca\/good-and-not-so-good-debt-whats-the-difference\/#BlogPosting","mainEntityOfPage":"https:\/\/rkillen.ca\/good-and-not-so-good-debt-whats-the-difference\/","headline":"Good and not-so-good debt: What\u2019s the difference?","name":"Good and not-so-good debt: What\u2019s the difference?","description":"If you use credit with good judgment and with a solid plan to pay it off, you stand a good chance of profiting from the funds you borrowed. It\u2019s important to remember that when it comes to taking on debt, you should approach the decision carefully and only take on debts that will grow your […]","datePublished":"2018-12-18","dateModified":"2023-04-13","author":{"@type":"Person","@id":"https:\/\/rkillen.ca\/author\/adminrkillen\/#Person","name":"R. Killen","url":"https:\/\/rkillen.ca\/author\/adminrkillen\/","identifier":1,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/291a08cd2df156bf4f7bceb09e15cda94bbf15ef7e70c7db3a538bde0c4a0230?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/291a08cd2df156bf4f7bceb09e15cda94bbf15ef7e70c7db3a538bde0c4a0230?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Richard Killen and Associates","logo":{"@type":"ImageObject","@id":"https:\/\/rkillen.ca\/wp-content\/uploads\/2016\/08\/landscape-logo-12345-for-web.png","url":"https:\/\/rkillen.ca\/wp-content\/uploads\/2016\/08\/landscape-logo-12345-for-web.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/rkillen.ca\/wp-content\/uploads\/2018\/12\/good-credit-bad-credit.jpg","url":"https:\/\/rkillen.ca\/wp-content\/uploads\/2018\/12\/good-credit-bad-credit.jpg","height":214,"width":499},"url":"https:\/\/rkillen.ca\/good-and-not-so-good-debt-whats-the-difference\/","about":["Credit","Credit Rating","Debt","Debt Counseling","Finances"],"wordCount":838,"articleBody":"If you use credit with good judgment and with a solid plan to pay it off, you stand a good chance of profiting from the funds you borrowed. It\u2019s important to remember that when it comes to taking on debt, you should approach the decision carefully and only take on debts that will grow your financial worth and\/or positively affect your life. The best way to know how to control debt \u2014 along with most things in our lives \u2014 is to look before you leap. Be sure to ask yourself if the credit is necessary, what will it involve, is there a better way to get what you want than by incurring this debt and how fast will you be able to get rid of it. For example, ask yourself:What is its purpose, i.e. the long-term goals and benefits you will achieve as a result of taking on the debt?How you will pay it back?And, where it fits within your cash-flow budget?One way to ensure that taking on new debt won\u2019t be an issue for you is to understand the difference between good debt and not-so-good debt.Good debt generally has the following qualities:It is taken on for something that will likely not lose value over timeIt will leave us better off in the long-term and provide us with lasting and, with luck, ever-increasing benefitsThe debt will not have negative consequences on our present and near-future overall financial positionIt will help us manage our finances more effectivelyIt will help leverage your wealthThe debt is used in a responsible way, with details carefully thought out and with the long- term view in mindThere is a clear and specific reason for taking out the debtThere is a realistic plan for paying back the debt as quickly as possibleThe debt was obtained through the cheapest and most effective borrowing method available, with the most reasonable interest rate, term and chargesNot-so-good debt has the following features:It feels like free moneyIt often provides some form of instant gratificationIt will not provide some increase in value to us over timeIt reduces your wealth or offers no opportunities to grow wealthIt keeps growing, because of the interest rate and supplementary chargesIt seems like it will never be paid offIt may have an unrealistic repayment planHow to stay out of debtThe fact is that no matter how much our financial life may have jumped the rails, you always have the power to get it back on track, regain control and avoid debt situations like bankruptcy. You’ve also seen how much of a role our attitude plays in grasping that empowerment. Seeing the glass to be half-full rather than half-empty can make all the difference in the world. If you can manage your credit wisely, you can enjoy the many benefits it offers. As you know, it can be a very useful tool by helping you accomplish important life goals, boost your net worth over time and enhance your quality of life, just so long as you remain the one in charge.The next logical question likely is: “What can I do to make sure that I do remain the one in control of my debt?\u201d \u00a0Of course, the short flippant answer is: don’t borrow. But as we\u2019ve already seen, there are times that taking on debt will be necessary. The majority of us may see abstention as too lofty a goal. It can be done, but very few of us will be in the envious financial position of having the money to satisfy all our needs, and our wants, without borrowing. The trick will be to manage it properly and not allow it to take control.Consider sticking the following reminders to your fridge to help keep you on the straight and narrow in 2019:Best way is to stay out of debt completely, don\u2019t borrow full stop. But some are not avoidable:MortgagesCar loansStudent LoansImpulse \u2014 clothing, food, entertainmentf you actually need to take on some debt, what is it that you are trying to accomplish?Have a plan \u2013 this is the goal of how you\u2019ll pay of the debtDevelop good habits and stick to positive financial routinesMost important, learn to manage your cash flowCreate a simple cash flow spreadsheet or table; this can also be done through money management software like Intuit Quicken or MS MoneyMake tracking your money an automatic process; enter and update your transactions regularlyRemember, when it comes to tackling your debt:Be honest with yourself about what went wrongMake a decision to tackle the problemSeek professional advice to understand your options; remember, you\u2019re not alone, keep your pride in checkAccept the reality of the situation and stay positiveif it becomes too much for you to handle, never be afraid to consult with a debt expert or professional."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Good and not-so-good debt: What\u2019s the difference?","item":"https:\/\/rkillen.ca\/good-and-not-so-good-debt-whats-the-difference\/#breadcrumbitem"}]}]