How much bad debt do you have?

Only the 6k credit card... I wouldn't even know how to go about getting a different unsecured loan.

 

Credit card paid off everrytime. Used cc for almost everything to get points. Mortgage for PPOR and IPs atm.

 

Hmmmm iv eactualy never sat down and defined what bad debt actually is

 

A car loan is our only 'bad debt'. Plans to pay it down pretty quickly though and save as much as possible on interest

 

Ive always considered it 'good' if I have used the money to buy an asset which provides income or is expected to increase in value.
Its bad if it does not and will never do this.

It can (and now this thread will) get technical. If you buy for example gold. Not an income producing asset - but you still buy it for investment purposes. I claim it as good debt.
A block of land - again... not income producing but... Provided it is intended for investment/development - good debt.
A ppor (I consider this one to be bad debt - but that is me - others will be different).

Another consensus is if it is tax deductible. If yes = good debt. Its not perfect by it works ok mostly.

Blacky

 

I consider bad debt to be debt for something produces no income and will depreciate in value or a service for personal use

And which you have a loan or credit card payment on it that you dont have the cash for. Or you do have the cash for but dont pay it off for whatever reason

 

Probably better to define debt as bad, necessary and good debt.

Necessary debt might be a car loan, you can't afford the car but it is necessary to get to work, where this gets messy is determining whether a $10k or a $70k car loan are the same. The larger car loan could be classified as bad debt as the person couldn't afford the car if they required a $70k loan to purchase it.

Its subjective but a $10k car loan could be easily and quickly repaid.

Good debt is for purchasing an asset which will increase in value and will usually provide an income.

 

I've never ever had a car loan... it's possible to get around in a sound car for under 5k....

 

Me either. I pay cash for my cars, usually around $10,000.

 

Agreed but millions of people have and don't have cash lying around. It also depends on how often the car is used and if viable public transport is available as a back up.
As a car is a depreciating assest it's probably bad debit, although if it's paid down quickly it's not too bad.

PPOR debt is necessary debt but is a major constraint for aggressive wealth creation as well.

 

None - I don't do unsecured debt.

 

What is this cult you belong to?

 

Hhmm. Okaaaaaayyyyyyyyy

/End sarcasm

 

ahhhh...cult?

 

43k- Student debt.

 

There's a lot of different kinds of debt going on here. Probably a good thing nobody has mentioned any Loan Shark debt...

 

If you have a guaranteed way of turning $100000 of somebody else's money into $200000 over one year and only need to spend a couple of hours filling out some paperwork, and need to give back the owner of the money their $100000 and plus between $3000 and $7000 dollars back at the end of the year, would you call that bad debt?

I would not. However it would be better if you could use your own money for that.

 

My bank statement summary has a BIG minus in front of it, I am perfectly comfortable with that

 

$0 bad debt. Rentvestor, CC paid off every month, drive a cheap car, etc.
I suspect this group isn't going to be representative of the general population.

 

0$ bad debt. Never had my CC's unpaid unless they offered a promotional rate of 0% interest.

Total CC limit atm is 55K but I am getting rid of a few CCs because they impact your serviceability regardless paid off or not. For the bank its a bad debt even if you have 0 balance on your CC