Bad debt is when you borrow to buy consumable items. If you’re borrowing to buy clothing, vacations, cars, electronics—anything that starts losing value as soon as you buy it—you’re taking on bad debt.
On the other hand, good debt helps you build your net worth. It’s used to buy investments that will go up in value like a home, a business, stocks and even your education.
Make sure your net worth keeps rising and you’re not letting your debt go out of hand.