We have all heard about the difference between “bad debt” and “good debt”.
“Good debt” is borrowed money that has been applied to productive assets that are making money for you - business assets, rental properties, share portfolios. The interest you pay is typically tax deductible.
“Bad debt” is borrowed money that has been spent on private stuff. That’s not necessarily a bad thing, but it’s dead money that doesn’t pay its way and the interest isn’t subsidised by the tax system.
So which debt should you reduce first? It’s a no-brainer really.
