Good Debt vs Bad Debt Tip

In general debt is thought of as being bad, but as you know few of us would own our homes if we considered the investment of a home as being bad. Your residence is a good investment, but only if you didn't spread your budget too thin to acquire the home you're in.

Living within a sound budget is an important foundation to your financial strategy. Leveraging debt can be done within a sound budget, but it also depends on the condition of our economy. Here's a great tip to consider in regards to bad vs good debt:

"Sometimes, says Roger Montgomery, of Clime Asset Management. Debt is good when asset prices are going up; when they're falling [debt] goes against you. Borrowing to invest is a sound strategy when interest rates are low and the prices of assets such as shares and property are rising."

As Roger Montgomery stated above, the word to pay attention to is "sometimes", so that strategy doesn't always work in our favor. Read further to understand more about that debt leveraging strategy with our current economic status.

No comments: