Real Estate

Why what you’ve been told is probably wrong


You may have heard of debt being categorized as two types: good debt and bad debt. “Good” debt is defined as money owed for things that can help build wealth or increase income over time, such as student loans, mortgages or a business loan. “Bad” debt refers to things like credit cards or other consumer debt that do little to improve your financial outcome. These are oversimplifications. The distinctions between “good” and “bad” debt are a lot more nuanced.

It’s worth revisiting this topic and understanding the new rules of the debt game. While student loans and mortgages can be used successfully to build wealth or increase your income, that isn’t always — or necessarily — the case. Using “good” debt successfully depends on a number of factors.

Student loans

Debt is a necessity for many lower- to middle-income Americans who wish to fund a college education, but as we’ve all come to understand, not all degree programs are created equal. According to Carrie Schwab-Pomerantz, a financial advisor, board chair and president of the Charles Schwab Foundation, the rule of thumb is that you shouldn’t borrow more (in total) than you expect to…

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