“Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor.” - Wikipedia

Debt is basically something, typically money, that is owed to someone else. Sometimes referred to as a financial obligation Debt is the “condition of owing” - “thefreedictionary.com”

Types of loans: mortgages, car loans, credit cards, student loans, medical bills, personal loan (maybe from a mob boss)

Here’s how it works: You need money, I will give it to you, You will pay me back over a defined period of months or years and I will (generally) charge you interest.

• Interest is money that is paid for the use of money
• Average CC interest rate in Sept 2020, according to the Federal Reserve is 14.52% - this has been rising over the past several years
• Average auto loans are at 4.21% ● What about “0%” interest? - it’s a marketing ploy for you still buy their product - psychologically we think we’re getting such a screaming deal Accessing loans is often tied to your credit score - this is a number that you get assigned that tells lenders if you will be good or bad at repaying a loan
• The higher your score the better terms you get! Common types of loans: mortgages, car loans, credit cards, student loans, medical bills, personal loan (maybe from a mob boss) Easy rules of thumb: ● If the debt increases your net worth (over time) or has future value, it’s good!
• If the debt decreases your net worth, it’s bad

Types of “good” debt (so long as you can meet all monthly financial obligations):

• Mortgage
• Student loans
• Business loans

Types of “bad” debt:

• Credit card debt
• Car loans

The debt paradox: You have to take out loans (even CC or auto) in order to prove that you are responsible and capable of repaying loans.

• This might be like saying “in order to prove you are not an alcoholic, you must begin drinking”

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