Meridian Blog

I’ve started grocery shopping with my air pods in…not to be anti-social but because—as a Christmas purist—I firmly believe that there should be NO Christmas music before Thanksgiving. If you start listening now, then you’ll hear “All I Want for Christmas” 2,954,359 times before December 25.*

Stores are eager to roll out the holiday tunes, as the general sense of nostalgia and holiday sentiments tends to increase our desire to spend money. Retailers spend a lot of time and effort curating their playlist and shopping experience to maximize sales…which for some of us ends with higher balances on credit cards than we intended!

So as we turn the corner into Black Friday and the rest of the holiday season, here is a quick reminder of “good debt” versus “bad debt”…

Obviously, in a perfect world, there is no such thing as “good debt”—we’d all just pay cash for everything. But, in today’s economic environment, that is not always practical. The judicious, intentional, and thoughtful use of debt can improve your chances of long-term financial freedom. So, in the face of having to choose when to borrow, good debt and bad debt are terms used to distinguish between borrowing that can help improve your financial situation and borrowing that can hurt it.

Good Debt

Good debt is typically used to finance investments that increase in value over time, such as student loans, mortgages, or business loans. These types of debt can help you build assets or enhance your earning potential. For example, taking out a mortgage to buy a home can lead to home equity appreciation, and investing in education can boost future income. Learn more about how good debt can benefit your finances.

Bad Debt

Bad debt, on the other hand, usually involves borrowing for non-essential items, consumable products, or things that depreciate in value quickly, like credit card debt for consumer goods or high-interest loans. This type of debt can create financial stress if it accumulates without contributing to long-term wealth or stability. For further insights, check out the consequences of bad debt.

The key difference is that good debt has the potential to generate value, while bad debt often leads to financial burdens without lasting benefits.

Source: Investopedia / Candra Huff: https://www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp

The key difference is that good debt has the potential to generate value, while bad debt often leads to financial burdens without lasting benefits. So, be smart, and feel free to Christmas shop in air pods to avoid Mariah Carey making you buy more than you budgeted for the holidays this year! 😉

*Seriously, Mariah Carey makes about $2,000,000 in royalties every holiday season…and she earns about 1 cent every time it is played…so if you do the math, that’s a ridiculous amount of airtime!