Good Debt Vs. Bad Debt

This video breaks down the complex world of debt, showing how borrowing can either propel you toward wealth (“good debt”) or trap you in costly cycles (“bad debt”). You’ll learn the defining features and real-life examples of each, understand how interest and the debt cycle work, and discover practical strategies for managing borrowing responsibly so debt serves you rather than controls you.

Learning Objectives:

Upon completion of this module, students will:

• Define debt, explain how interest works (simple vs. compound), and describe why it’s a double-edged financial tool.
• Distinguish “good debt” (student loans, mortgages, business loans) from “bad debt” (credit cards, payday loans, luxury financing) based on long-term value, affordability, and terms.
• Illustrate how high-interest rates and the debt cycle can rapidly turn small balances into unmanageable obligations.
• Apply smart money habits—budgeting, needs vs. wants analysis, emergency funds, and intentional borrowing—to avoid debt traps.
• Cultivate a healthy relationship with debt by borrowing only for worthwhile purposes, keeping balances manageable, and seeking help or plan adjustments if debts become overwhelming.