There are essentially 3 types of Debt:
1.Good Debt
2.Bad Debt
3.Necessary Debt
Good Debt is when you
buy income appreciating assets (Business loans are also considered good debt as
long as your business is making a profit).
Necessary Debt Could
be a loan against your home or a Student Loan.
Bad Debts are Credit
Cards, Car and Consumer Loans.
Good and Necessary Debt are an investment in yourself because you are borrowing money to
create an income producing property or to pay for an education that will
increase your capacity to earn.
Bad Debt is the kind
of Debt that you want to minimize and eradicate as quickly as you can while you
maximize your Good Debt, which is usually Tax Deductible.
If you’re still at the asset growth stage of
your investment journey, you’ll need to minimise bad debt and pay it off as
quickly as you can while you maximise your good (usually tax deductible) debt
and buy appreciating assets.
By the way
Good debt tends to have lower interest rates while the interest
rates of bad debt tends to be higher.
RealRenta
RealRenta can help you reduce your bad debt by reducing the cost of your property
management fees, thus saving you money which you can put off your bad debts.
RealRenta,
Just a better way to manage your rental property
Jason Gwerder
Friday, 29 April 2016
