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Money 101 · Episode 9Passive Income Took Me 5 Years To Build
Money 101 · Episode 8Why A Higher Salary Will Not Make You Rich
Money 101 · Episode 7Why You Keep Making The Same Money Mistakes
Money 101 · Episode 10
Look... I was paying for yesterday with the money I needed for tomorrow. A credit for a car, a credit for a laptop, a credit for a holiday — each one felt small. Together they were eating everything. Then a few years later I took out a mortgage at 1% interest on a rental property. That debt made me significantly wealthier. Same word. Completely different outcome.
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Not financial advice. For educational purposes only. I am not a financial advisor. Always do your own research and consult a qualified advisor.
Look... one month I looked at my bank account. Salary had arrived. Everything was gone. I could not figure out where it went. Then I found it — a credit for a car, a credit for a laptop, a credit for a holiday. Each one felt small on its own. Together they were eating everything. Not just the money. The interest on top of the money. Month after month. For things that were already bought, already used, already in the past.
"I was paying for yesterday with the money I needed for tomorrow."
❌ Bad Debt
✅ Good Debt
Look... a few years after that moment at the bank, I took out a mortgage on a rental property. The interest rate was 1%. The tenant's monthly rent covered the entire mortgage payment. That meant I was building equity in an appreciating asset every single month — using someone else's money. The property appreciated. The mortgage shrank. My net worth grew. That is what good debt looks like in practice.
Before taking on any debt, ask this: will this debt buy me something that generates more value than the total cost of the debt — including interest — over its lifetime? If yes, it might be good debt. If no, it is almost certainly bad debt. A car loan buys a depreciating asset that generates no income. A mortgage on a rental property buys an appreciating asset that generates monthly income. Same word. Completely different financial outcome.
What is good debt?
Good debt is borrowing used to acquire assets that appreciate in value or generate income — such as a mortgage on a rental property. The key characteristics are low interest rate, income-generating or appreciating asset, and a clear path to the debt paying for itself over time.
What is bad debt?
Bad debt is borrowing used to fund consumption or purchase depreciating assets — credit cards, car loans, holiday finance. These charge high interest on things that lose value or have already been consumed. The debt outlasts the benefit of what it bought.
Is a mortgage good debt or bad debt?
It depends. A mortgage on a primary residence is generally considered neutral to positive debt — you are building equity in an asset that may appreciate. A mortgage on an income-generating rental property where the rent covers the payments is widely considered good debt. A mortgage that stretches you beyond your means is potentially problematic regardless of asset type.