The label depends on cost, purpose and your ability to repay.
Direct answer
Good debt usually helps you build long-term value or earning power at a manageable cost. Bad debt is typically high-interest borrowing for things that lose value fast. The line is not fixed: any debt becomes harmful if you cannot afford the repayments.
Questions to ask
- What is the interest rate and total cost?
- What will I get out of it, and will it last?
- Can I afford the repayment even if my income drops?
- Is there a cheaper way to get the same thing?
Examples
| More likely useful | More likely harmful |
|---|---|
| Education that raises earning power | Unpaid credit card balances |
| A sensible home loan | Payday loans |
| Business loan with a clear plan | Buying luxuries on credit |
Where Teyro fits
Teyro's Money Habits That Build Long-Term Wealth course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Borrow only with a plan and a way to repay. This is general education, not advice.
This is general education, not personal financial advice.
