debt

A Debt is amount of money owed to somebody else. The one who owes the money is called borrower or debtor and the one who lends the money is called lender or creditor.

There are diffrent types of debt depending on who the debtor is. For example there is personal debt like car loan, mortgage, credit cards, and personal lines of credit. Then we have corporate debt and government debt.

Debt can be considered "good debt" and "bad debt". A debt is considered bad if the purpose of the debt is purely for consumption. An example for bad debt would be a loan for expensive car you can barely afford, which you buy for personal use. On the other hand a debt is considered good debt if it's used for investment. The following are examples of good debt. You can get a student loan and thus invest in your education and future. You can get a mortgage on a rental property, which you can rent out and which will bring you a positive cash flow. You can get a business loan to build or expand your business.