Borrowing money can saddle you with years or decades of debt that prevents you from living your best life. At the same time, it can also open doors to investments<\/a>, opportunities and financial leverage that you would otherwise never have.<\/p>\n Holiday Spending: Get Top Holiday Shopping and Savings Tips<\/a> Classifying debt as either \u201cgood\u201d or \u201cbad\u201d is an oversimplification. The same type of debt can become a burden or pay long-term dividends depending on how you borrow, how much you borrow and why. That said, let\u2019s take a look at forms of debt that are typically worth it, and those you should avoid<\/a>.<\/p>\n The best example of good debt is a mortgage that you can afford. Most people don\u2019t have six figures to plunk down for a home, but real estate is still one of the cornerstones of middle-class security and generational wealth.<\/p>\n \u201cBuying a house is worth going into debt for as long as you can afford to pay the mortgage and all the related costs of house ownership, including utilities, repairs and maintenance,\u201d said Jacqueline Gilchrist, founder of Mom Money Map<\/a>. \u201cA house is a valuable asset. Depending on the market, a house can appreciate and become more valuable over time.\u201d<\/p>\n The first time you don\u2019t pay your statement balance in full, compound interest starts working against you \u2014 and compound interest is a powerful opponent. With the holidays approaching, most Americans will find that credit card debt is the kind of borrowing that\u2019s most likely to get them into trouble \u2014 the kind of trouble that can take years to undo.<\/p>\n \u201cCredit card debt is considered bad debt because it\u2019s used to finance purchases that don\u2019t appreciate in value and may even depreciate,\u201d said Lauren Davis, financial advisor and founder of the Moolah Project<\/a>. \u201cAdditionally, credit cards typically charge high interest rates, which can make it difficult to pay off the balance.<\/p>\n
Explore: GOBankingRates\u2019 Best Credit Cards for 2023<\/a><\/em><\/strong><\/p>\nFor Most, Debt Is the Only Ticket to Homeownership<\/h2>\n
Credit Card Debt Is the Bane of the American Consumer<\/h2>\n