From a first principle perspective, all debts are bad, even if it is at 0% interest rate. Period.
A definition of debt is something that does not raise your wealth and does not give you money month on month. In other words, a debt reduces your wealth. A borrower is enslaved by the debt.
Consider your credit card purchases, your impulsive purchases (Zara, iPad etc), your car loan etc. These are called consumer debts and the product depreciates over a period of time. It doesn’t build your wealth whatsoever.
A question, that keeps coming is
How about debt for properties?
How about debt for business emergency?
How about debt for tax savings?
It is a tricky road to tread. If you could us debt as a tool to increase your wealth and make it give you some money month on month then may be we will call it as good debt (that too with a heavy heart).
A debt service for scaling a small business at no equity loss which provides coverage for Line of Credit (say net 30), a student loan that gives you exponential ROI (preferably a STEM stream), a real estate investment that gives you CoC (Cash on Cash Return) above 8% etc may be considered. I still strongly advice to go debt free if you are interested in financial freedom.
All debts in my dictionary are bad debts. Some play this game really well. Most of us don’t. So stay away.
🥂to no debts!
