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 Hmmm.....we know, today we are touching a very sensitive topic and that's debt. Truly, debts are one of the most controversial topics of all times. In the beginning itself, Octanmen would like to inform you, not all debts are bad. Whenever, people think of debt, they are haunted by financial impasse. We agree it happens with most of us but my friend every coin has got two sides. So, if you can't see the bright side of financial life, let’s polish the debt side.

We usually carry both good and bad debt for various reasons. Though, a good debt is taken on for a sound reason and there is an expected payoff later. You'll be thinking what good debts are, well they can be student loans and mortgage loans. Whereas, bad debts can be credit card debt along with payday advance loans. There are a few types of debts which can be good as well as bad. It all depends how you take and use them. The best example of this type of debt is auto loan. It can be either good or bad depending on your situation and how you handle it.

If you are able to differentiate between good debt and bad debt, you can easily maneuver your personal finances into positive territory. Confused???? To solve this confusion of yours, lets look at some good debts (Luckily) and bad debts (Obviously).

Credit Card Debt means Bad Debt:

This is one of the biggest evils giving sleepless nights to many. There is no question that credit card debt is actually a bad debt. We know, credit cards are easy to use, as you just need to swipe the card and off you go. However, this convenience is teamed with high interest rates that vary from 15% to 20%. Having a credit card balance is the exact opposite of saving money in a savings account.

Auto Loan means Often Bad Debt

We all like to own a car and finance is the best option. On papers auto loan looks easy and simple but in actuality, its a tricky act. Initially auto loan is treated as good debt but when you fail to pay one installment it turns into a monster. Paying interest on a car loan is always considered as a bad debt but when you use car to commute to work, school, and other places on time, financing a car worthwhile for majority people.

Mortgage Loan means Good Debt

Okay......finally, a good debt is here. Living in your own house is the dream of many families but very few are able to cherish it. With mortgage loan, now you can too have your own home. Even if we have money, still we wouldn't pay money in cash, because of two reasons:

* It is better to use leverage and take full advantage of the bank’s money
* Depending on your location where you live and a tax deduction on mortgage interest.

Student Loan Debt means Good Debt

It comes with no surprise that student loan comes is actually a good debt. Expenditure incurred on studies is finally redeemed after you earn your degree and the debt can be paid off. At times, student debt can be bad when the earned degree yields a low-paying job.

For avoiding your good debt turn into bad debt, you should keep a constant eye on your financial chart. The best way is to make a list of your good debt and bad debt. Overall, hiding our financial lives of bad debt is always a positive thing and having a little bit of good debt is not a bad option either. However, make sure it remains good only.

Octanmen is an online business magzine which provides you the latest information where and how to invest in the safest way in business tips and tricks. Come and explore theonline business magazine for more business news.

Article Source: ArticlesBase.com - Debts Can Influence Your Financial Planning