Think About It: Read each of the following statements and decide if you agree.
Question
Answer
All debt is bad.
Did you know that some debt, like school loan debt, can help you get ahead in the future by helping you earn more money? Other debt, such as buying a car, may be necessary in order for you to purchase big ticket items, like a home, which have lasting value. These are examples of good debt. They are investments in your future.
Having debt can increase your wealth.
If you purchase something that will increase in value or improve your ability to make money, chances are you will increase your wealth. If the purchase decreases in value without helping you make more money, however, you will decrease your wealth. For example, if you incur debt to buy a house and the house increases in value while you own it, then your wealth increased. But, if the house decreases in value, then your wealth decreased.
It is difficult to get out of financial trouble.
It can take years to recover from too much debt or poor financial decisions.
Section Warm-Up
