Question

An example of an asset-producing debt

Answer 1

For example, education debt is a fact of life for many of us but we should view it as an investment in our future. We’d like to think it will provide us with an opportunity to increase our future income, so that makes it good debt. Debt for an unaffordable expensive car would be considered bad debt since it is an unnecessary expense that provides no income and depreciates in value. Debt for something that depreciates and provides no income would certainly be considered bad debt. An education is an investment that appreciates in value by increasing future income potential... the car is a depreciating expense that will provide no income and will rapidly depreciate in value (uses up income instead of providing income). The expensive car may be more fun to have, but the education will be the best investment.