When you mention debt and building wealth in the same breath many people look at you as if to ask; ”how much have you had to drink”? To some extent they are right. Debt and wealth do not normally go together. The confusion is based in how we look at debt. Debt is normally looked at negatively, but should actually be viewed in two separate categories.
The first category of debt is the traditional type: bad debt. Bad debt is when you take on a payment or other lien for an item that decreases in value. This debt often leads to overspending and the need to work with a debt consolidation company in Texas. Items in this category are new cars, nearly anything that you can buy with a credit card, even over-priced educational institutions fall into this category.
Good debt can be anything that will increase in value. Taking on a mortgage is an example of good debt. Taking on a loan to start a new business is good debt no matter the success level of that business. The principal difference between good and bad debt is whether you lose money (bad debt) or create a future stream of income (good debt).
Once you have begun that steady stream of income, you will be building wealth from incurring the right kind of debt. Each time you are thinking about taking on a loan decide what kind of debt it is. Buying a car is unavoidable, but buying a brand new one is not the wisest choice. Getting a new wardrobe is quite a thrill, but putting it on a credit card will only drag your budget down. It is up to you whether you use your money wisely and build wealth so that you can enjoy life more.
