Money Matters – Good debt

Debt is anything one person owes another; it could involve real property or money or take any other form. The most frequent type of debt in our age is in the form of money (loan), which is constituted by an agreement between two parties, where one agrees to lend the other money.
On some occasions, determining whether the debt is good or bad depends on the person’s financial situation at that point.
In this episode, we focus on what I consider good debt, which is debt concentrated on improving your life or that will have a good return on investment.
Below are some of the debts considered good:
Education – the more education you have, the higher the probability of earning more income. There is a positive correlation between edu- cation and finding employment. Better educated people stand a good chance of being employed in posi- tions that pay very well. Taking a loan to further your education is a move in the right direction to be competitive in the labour market.
Starting a business – borrowing money to start a business can be regarded as good debt, although it comes with significant risk and other challenges. In addition, the rewards of a successful business are financially beneficial. Make sure you do in-depth research before ven- turing into business.
House/property – borrowing money to pay for a home in the hope that your home will be worth more by the time your loan is paid up. Buying property is an investment as you can rent it out to tenants who will pay the loan on your behalf.
In conclusion, we have discussed what constitutes good debt and discovered that it is debt aimed at enhancing your life or improving your wealth. This type of debt has the potential to improve your net worth.
– Sibusiso is a professional in the financial services sector in Carletonville.