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Is the Bailiff Calling?

“Debt” is undoubtedly a four-letter word. In recent years the terms “good debt” and “bad debt” have entered the vocabulary with, unfortunately, far more than their fair share of meanings.

These meanings range from tax deductible/non tax deductible through affordable/beyond budget and can include value judgements (by outsiders) that if you can’t afford to buy something that you want without borrowing you are committing financial sin.

I do not know of any really wealthy family – Onassis, Gulbenkian, Rockefeller, Pierpont Morgan, Hancock….that has not only borrowed money but has embraced the idea of borrowing from a person or institution to make that money work for them while paying interest to the lender.

“Good debt” can be recognised as that which has been put to profitable use and repaid with interest as agreed to the lender.

“Bad debt” is unaffordable and usually makes the lender even more unhappy than the borrower.