Debt is often the villain of the financial story, and for good reason. At its worst, it can prevent you from reaching your goals and follow you for your entire life. But in many cases, it allows you to invest in your future and make purchases that will multiply your earning potential down the road.
Whenever you take on debt, there’s always risk involved. However, depending on the type of debt you’re leveraging and how you manage it, you can get a healthy return on your investment. The key is understanding the difference between good debt and bad debt.
If you’re wondering whether a type of debt is good or not, ask yourself these key questions:
If the answer to one or more of these questions is yes, it makes the cut. However, after establishing that it’s good debt, you need to ask yourself one final and very important question:
Do I already have too much debt on my plate?
Because even if all the previous answers were yes, a yes for this one means it’s not a fiscally responsible decision. If you’re already struggling to keep up with your current debts, or taking on this new debt will stretch your budget too thin, it’s not worth the risk.
Depending on your situation, even “good” debt can be a bad idea. That said, the following examples are widely considered good debt:
When managed responsibly, these forms of debt allow you to leverage what you owe to improve your financial standing in one way or another. It may take a decade or more to see the returns, but that’s the name of the game.
Bad debt is anything that doesn’t pass the good debt pop quiz we just threw at you.
If it drops in value as soon as you buy it, if it doesn’t provide any long-term benefit or growth in earning potential, if it has a high interest rate, and if it doesn’t generate income, it’s bad.
Now, you may be thinking, “That sounds a lot like a car loan.” And you’d be right.
Auto loans are one of the prime examples of debt that should be avoided. But if you live in the US, there are only a few cities where you can get away with not owning a car, and we all have to get to work somehow.
Sometimes you have to bite the bullet on these forms of debt, but you should avoid them or keep what you owe to a minimum whenever possible. These include credit card debt, cash advances on credit cards, car loans, personal loans for items you don’t need, and payday loans.
If you have a lot of money you’re willing to part with, there are multiple investment options that allow you to leverage debt with the potential to see crazy returns. These include things like short selling, hedge funds, and leveraged exchange-traded funds, which can multiply your investments several times over…
But nobody can predict the market, so these options come with a boatload of risk, even for experienced traders.
So, play at your own risk.
In a perfect world, you’d pay for your mortgage, education, and car all in cash. No strings attached. But unless you win the lottery, you’ll have to leverage debt at some point to build the life you want.
The trick is to:
The only trouble is that between car loans, student loans, and mortgages, you’ll likely have to juggle at least a couple of debts at the same time. And for a long time.
Keeping that up can be tricky when you have a million other things on your plate. Many people simply don’t have the bandwidth to manage their finances as closely as they need to to pay down multiple debts at once.
That’s why we created the Money Max Account.
The Money Max Account (MMA) is an interest reduction software designed to tackle debt with clinical precision—whether you only have a mortgage or have credit cards, student loans, and a car loan too.
This system uses sophisticated algorithms and banking strategies to track every aspect of your finances around the clock and give you directions on which debt to focus on, how much to put toward it, and when.
It does this every step of the way until you’re fully paid off, like a financial GPS.
When life takes you on a detour, like an unexpected medical expense, the system adapts to reflect your new situation, putting you back on the fastest possible route to debt freedom.
Along the way, you can track your progress on MMA’s customizable dashboard, where you can see your accounts, custom goals, projected pay-off date, and more.
Following MMA’s guidance can take you from where you are now to having paid off all your debts, including your mortgage, in as little as 7 to 10 years. All while eliminating up to 70% of your interest payments, helping you save tens of thousands or more.
Want to see what MMA can do for you? Fill out the form below to sign up for a free consultation. One of our financial experts will give you a tour of the program and show you projections on just how much money and time it can save you.
With MMA, you can confidently leverage debt and build your financial future in record time.