Secrets of the Wealthy
Good Debt Bad Debt
Some people think holding a mortgage is a negative debt that must be eliminated as soon as possible.
Though managing debt is an important skill to have in your toolbox, it is just as important to be able to recognize the difference between positive and negative debt.
Ken Chung gives the following example:
“My first home was only $167,000. Today it’s worth in excess of $450,000. Most people would consider that to be a good debt.”
While it is true that the real estate business has its ups and downs, Ken Chung believes if you focus your sights on long term financial freedom, investing with knowledge will always leave you far above the red.
Ironically, the same people who fear a mortgage may suggest
financing a new truck is a ‘good’ debt. That is an example of what Ken believes to be a ‘bad’ debt, because, “vehicles only depreciate in value over time.”