Explain to me good debt

[Mike Brown]

Hi everyone, 

I'm Mike and I'm an intermediate Internet Marketer.  I recently became interest in Real Estate and thought I come here for some advice on what good debt actually is. I know bad debt are like credit cards you owed to banks and creditors and things like that. I've been a long fan of Robert Kiyosaki's materials and bought some of his books, but never really came to a full understanding of what they are. So I'd greatly appreciate if someone can educate me on good debt. 

I am in bad credit right now, I have $2k school tuition fees that need to pay off and a few credit cards no more than $1k need to pay off. 

My goal is to rebuild my credit but I am clueless and don't even know where to start. 

One day, I would like to buy my first Apartment unit and rent it out to tenants. 

[Eric H.]

Great morning @Mike Brown,

I understand good debt as being debt that you can use to earn a better rate than what the debt is costing you. For example, you incur debt at 5% but spend it on an investment that is making you 10%. Essentially you are making 5% with no out of pocket cash. Another way to use good debt is to get a credit card with no interest for 12-18 months. Use those funds to invest in something that yields a decent percentage before the no interest period ends, pay off the debt, and pocket your profit. Another way to use no interest credit cards is to transfer balances from other cards with high interest rates to the no interest card. The key is to pay off the debt before the no interest period ends.

What is your monthly income? If it is considerably higher than your monthly debt payments you are in good shape. The ratio between the two is called your debt to income ratio or DTI. I think it's good that you are starting to analyze your debt while you only have 3k right now. To put that in perspective, I have about 300k in debt and more than half of it is not what I would consider good debt. Bad decisions I made but also valuable learning lessons.

Finally, your last statement should read "One day I WILL own an apartment building". Speak your dreams/goals into existence. Put it out into the universe, TAKE ACTION, and the universe will reward you accordingly.

Happy investing!!

Peace!!