This is one of the amazing things that I have learnt from Financial Wizards like Robert Kiyoasaki. Many people seem to think that all debts are bad; possibly they will change their opinion after reading this.
Good debt is one that helps you acquire assets. Of course, assets are those which put money in your pocket. For example, if you borrow to invest in Mutual Funds and save on income tax, that is a good debt. In many cases, you also get good dividend from the Mutual Funds. I have seen this in the case of all my family members. In fact, good debts are excellent leveraging tools when you become familiar with your Personal Finance.
A bad debt is very common amongst middle class; typically they borrow for liabilities meaning debts take away money from their pockets. Possible example is borrowing for buying expensive TV. Most of the credit card debts are bad debts. In fact, many do this because of peer pressure. It is the bad debt that is responsible many middle class remaining as middle class. They get trapped and it takes years to come out of the trap.
Though the distinction is obvious, you need to counsel with your Financial Planner and borrow only those good debts that have been included in your Financial Plan.
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