Not all debt is financial poison.
Conventional wisdom says to eliminate every loan as quickly as possible.
The truth depends entirely on what that borrowed money actually produces.
Bad debt consumes your future earnings. High interest credit cards charging 24 percent APR drain your cash flow month after month.
Good debt acquires assets that generate positive income or appreciate in value over time.
A reasonable mortgage on cash-flowing real estate builds long-term wealth. A low rate business loan can expand operations and increase net revenue.
The core rule is simple. Compare the interest rate of the loan against the expected return of your alternative investments.
Do you think good debt exists, or is all debt bad?
