What is Bad Debt?

[Ben Leybovich]

There's been a lot of discussion on the forums as it relates to differentiating bad debt from good.  The most common view on BP is that any debt which does not produce investment returns is bad debt.

I, for the most part, do not disagree.  However, there are caveats to this.  Before I state my definition, I'd like to take a pole.  Here we go - answer yes or no:

1. If you believe that so long as debt does not produce income it is Bad Debt - say YES.

2. If you believe that income-less debt could still be good debt - say NO.

What do you think?

[Elizabeth Colegrove]

I consider bad debt to be debt that is consumer debt things that you cannot afford. 

On the other hand, I don't think leverage things you would buy anyways a bad thing. Time Value of Money is very true. So taking advantage of that with 0% or low interest rates are awesome. 

For example, Buying a car that you were going to buy anyways and using a 0% interest rate. Taking that downpayment money and investing it into a rental. Now you have another rental who's profit covers much of that car payment. In my mind great leverage.