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Good Debt vs Bad Debt

These days, it seems that no matter where you go, you are constantly being pitched investment advice, or advertisements wanting you to buy products! Whether you see it on the television, radio, newspapers, magazines, social media!

 

While some of these products and/or investments may seem exciting, it’s important to determine whether the debt you could take on is a Good Debt, or Bad Debt!

 

Yes, there is such thing as a “Good Debt”! You work hard for your money, so it’s best to know the difference and see if you can put your money to work for you!

 

Good Debts are generally investments that will grow in value or generate a long-term income.

 

A few examples of Good Debts would be using the equity you have in your home or investments to:

  • Invest in real estate
  • Make home improvements to increase the value of your home
  • New business opportunities, or investing in a business 
  • Buying RRSP's
  • Education for yourself or for your children 
  • Investing where your investment yields a higher return than the cost of that debt

And of course, on the flip side, there are Bad Debts. A few examples of these Bad Debts include using your equity for the following:

  • Purchase of luxury items
  • Automobiles
  • Cottages (that aren’t used as rental properties)
  • Vacations 
  • Using your equity to pay off other debts 

If you decide to pull equity from your home / get financing. Make sure you determine that it is being used for a Good Debt. In addition, if you determine it’s a Good Debt, make sure you have your plan to pay it back. A good debt could easily change into a bad debt without a plan!

 

If you have ever thought about real estate investing - or had any questions or concerns - please contact me. I have assisted hundreds of people in real estate investing!

 

Call me direct at 519-624-5555 or e-mail my direct line at faisal@homeshack.com

 

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Faisal Susiwala
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June 12, 2017
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Faisal's career in real estate began at the early age of 18. He consistently earned a reputation as a top producer from the outset. In 1994, he joined the sales force of RE/MAX Twin City Realty Inc. and has continued to be a top producer there for the past twelve years. Susiwala covers a large sector of the Cambridge and KW market and attributes his success to a strong marketing plan with extensive advertising, state of the art technology, an experienced support team and a loyal clientele base for the past 17 years of being in the real estate business.

- Success Magazine