Is All Debt Bad? The Theory On Good Debt

GREENSBORO, NC - Some words just have a negative connotation. For instance: taxes and bills. The word "debt" is surely on the list. So is the notion of "good debt" really just a theory?

For a while people would say debts that make life better or are necessary are good debt. Like student loans, auto loans and mortgages. Nerd Wallet polled their experts and others and came up with these recommendations on good debt.

First, education. Students should find out the annual income of their anticipated career. Then don't take out loans any more than that salary.

If a student is unsure of a career path, $45,000 a year is a good benchmark. It's the median salary of a college grad in this country.

When it comes to cars, unlike a home, cars don't appreciate in value. If your car is simply to get to and from work, then spend less money and buy a used car.

And lastly, a mortgage. It's versatile, you can use it as capital or as income when you're ready to sell it. But, the goodness of it matters where you live and your own personal finances.

Bottom line Nerd Wallet experts say good debt is good debt, until you can't pay it off.


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