Good Debt vs Bad Debt

I used to subscribe to this mentally until I began working with clients finances 12 years ago and realized how dangerous this saying could be.

"Don't worry, it's Good Debt" I remember hearing as my student loans piled up.

"But your car is a good debt" the car salesman told me as I naively entered into a 7 yr balloon loan.

"Your interest rate is low, and besides, a mortgage is a good debt" I heard as I signed my life away for 25 yrs.

I'm sure we can all agree that a $15,000 student loan debt is 'better' than a $15,000 credit card debt -- but that doesn't make your student loan debt "GOOD".  Stay with me here...

A debt is a debt.  You owe someone money at an interest rate.  When you start categorizing debt as good or bad, it becomes a slippery slope of justification -- and that can wind you in a ton of problems.

Is your student loan debt good if you don't wind up practicing in your field of study -- perhaps landing a job that didn't even require a degree? 

What about financing a car you can't afford over 8 yrs because its "good debt" and after all, you need a car right?!

Or buying a home you can't afford if interest rates raise by a hair...because it's good debt. 

Or worse yet, when you consolidate your debt into your mortgage -- have you now just turned bad debt into good debt....leaving your credit cards open to free to give you the green light to spend, spend, spend?

Hopefully you can see now that its a fine line.  And once we start realizing that debt is debt...its not good or bad...I think we would all be a lot further along.

Yours in financial health,

Heidi