Genworth Canada: Good Debt vs. Bad Debt
By Lucas on Dec 10, 2013
Raise your hand if you’re in debt. Don’t worry, it’s not just you. According to Statistics Canada, the average Canadian household owes about $115,000.
If you’re losing sleep, make sure you know the difference between good debt and bad debt before you spend another night tossing and turning.
The video below is presented by Genworth Canada and features mortgage professional Kerry Colborne of Force 10 Capital Management. Colborne quickly and concisely outlines the difference between good and bad debt.
*Spoiler Alert*
Good debt: An investment. You plan on building equity. A mortgage is considered good debt because you have invested in real estate and you expect the value to increase over the years. Plus, you are paying for a home, and everyone needs shelter!
Another example of good debt that Colborne highlights is tuition. Where a mortgage is an investment in real estate, tuition is an investment in yourself. With a better education, you expect to make more money in the long run.
Bad debt: The only bad debt that Colborne discusses is credit card debt. We’re all guilty of it - we just swipe the credit card (most places let you just tap the card now...making it that much easier to hand over your money!) to get that new flatscreen that we oh so desperately need, or a new pair of designer jeans because last year’s style is so not cool anymore.
If you’re going to use credit cards, try to pay off the statement at the end of every month. Buy only what you need - like groceries and toilet paper! Of course, everyone needs to treat themselves, just do it responsibly.
Watch the video for some more info and tips!
