Changing narratives about money management in the wake of revolutionized banking:
A couple of decades back, bank loans or mortgages had numerous stigmas attached to them, and debt was believed to indicate distress, if not destitute. Credit cards were the earliest forms of debt that met with some degree of acceptance and were considered a tool for the rich rather than the poor. As the banking industry flourished and the user base expanded, credit cards transformed from their primitive forms, offering rewards, privileges, cashback, and unbelievably high credit limits to credible users – certainly not the poor ones. So, the myth of debt as an indicator of poverty has long been burst. The modern world uses the terms ‘good debt’ and ‘bad debt’ to exempt a good chunk of debts from the stigmas, and aptly so.
Good debts and bad debts:
One of the fundamental differences between good and bad debts is that the former increases your net worth in the future, and the latter depletes it. It is certainly bad debt if you take a loan to meet your everyday expenses or buy depreciating assets. However, mortgages, business loans, student loans, or any investment that has the potential to increase in value and generate wealth comes under the realm of good debt.
Is ‘good debt’ mandatory for thriving in the modern world:
The answer to this question depends on your individual goals. With changing times, definitions and meanings of wealth and luxury are also evolving, with modern wealth being viewed as far more than having some spare money at your disposal. In today’s world, the wealthy are those who do not have to sell their time to earn a living. They have multiple income streams and passive income channels and are free to pursue their dreams and passions instead of being trapped in a cycle of living paycheck to paycheck. Unless you are born with infinite riches, attaining this goal is not possible without taking some leverage from ‘good debt.’
‘Good debt’ is leverage, not burden:
As established earlier, gone are the days when all debt was considered a burden to be avoided. Good debt, nowadays, is the leverage that modern man can prudently use to increase his net worth and multiply his assets to generate passive income. Like all new inventions and innovations, wealth-building has evolved, and orthodox means have a great degree of limitation as compared to contemporary ones. Where it took the hard work of three generations in the past to build cherishable wealth for one generation, now it takes the smart work of one generation to build wealth for the subsequent three – thanks to tools like mortgages and soft loans. For good or evil, banks, lending bodies, and financial institutions are at the heart of contemporary finance management, and when effectively used, the results are lucrative and far-reaching. Good debt is here to widen the arena of opportunity manifolds for the modern man and enable him to bring what once belonged to the realm of far-fetched dreams into the realm of attainable reality.
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