Good Debt Vs Bad Debt
If you are Rich Dad series fans, you should have understand and differentiate between Good Debt and Bad Debt. In short and simple explanation, good debt make you richer while bad debt make you poorer.
Good debt is debt which help you get into debt at the same time help you expand your wealth. You use debt to acquire asset which bring passive income in future. Most well known example of good debt is acquire property for rent. Your debt is paid by your tenant.
Bad debt is debt which help you get into debt and add no value to your net worth. You get into debt just to get something you want not something you need. Getting into debt using credit card to buy unnecessary things is example of bad debt.
Before reading Rich Dad series, I thought there is only one type of debt, that is bad debt. How ignorance I am last time! I am in good debt as I borrowed money from government to further my tertiary study to increase my knowledge. “Knowledge is the asset” said by Robert Kiyosaki in his Increase Your Financial IQ.
