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Debt is usually described in one of two ways – Good or Bad. It’s important to understand the difference between them when looking at your finances. Good debt has lower interest rates and is considered an investment for the future; bad debt has higher interest rates and will not earn you any money as it ages. The easiest way to think about it is whether you’re borrowing money to buy an item that is going to increase in value, and therefore be a “good” debt, or decrease in value and be a “bad” debt. For example, buying a home = good debt. Buying a car = bad debt.
Working towards your goals can be hindered by high interest bad debt so it’s essential to work on getting rid of it, while you’re working toward your goals. To help you do that, we have created a tool called the “Debt Avalanche”. This will help you create a clear plan for paying off your debts and free up as much money as possible to go towards achieving your savings goal.
If you have any debts that you need to work on getting rid of, you’ll find the “Debt Avalanche” tool via the link below, along with instructions on how use to it.