Good Debt & Bad Debt
Good Debt: any money borrowed to buy an appreciating asset where the cost of servicing the loan does not affect your ability to save to the appropriate level & where the principal will be fully repaid before your retirement
Bad Debt: Everything Else
In sum, divide bad debt by your annual income and if that percentage is over 25%, it is time to make larger payments to reduce this number and make sure you also keep good debt at a minimum.
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