Yes - All Debt Is Bad
The Money Class You Never Got in School
The Lie We’ve All Been Sold
“There’s good debt and bad debt.” You’ve probably heard this line more than once—from financial advisors, teachers, even your parents. But here’s the truth: all debt is bad. Some might be less terrible than others, but every single type of debt comes with a cost—one that compounds over time and keeps you from building real wealth.
This blog isn’t about shame or judgment. It’s about clarity. Because understanding how debt works—all debt—can help you make smarter decisions from this point forward.
What Is Debt, Really?
Debt is when you borrow money you don’t have in order to buy something today. You pay it back later—with interest. Sounds simple, right? But every time you take on debt, you’re borrowing against your future freedom. You’re giving someone else a claim on your next paycheck, your side hustle income, or your eventual savings.
If you owe someone money, you’re not fully in control of your financial life. That’s not power—it’s pressure.
Why Even “Good Debt” Isn’t Good
Let’s break down the kinds of debt that people call “good” and why that label is misleading.
| Debt Type | Why It’s Considered “Good” | Why It’s Still Harmful |
|---|---|---|
| Student Loans | Education increases income potential | Many grads are burdened for decades, often with degrees that don’t match job markets |
| Mortgage | Builds equity, home values usually rise | You pay interest for 15–30 years, plus maintenance, taxes, and market risk |
| Small Business Loans | Can help you start or grow a business | Most businesses fail in the first 5 years; debt stays even if the business doesn’t |
| Car Loan | Reliable transport may be necessary | Cars lose value the second you drive off the lot—you’re paying interest on a depreciating item |
The Hidden Cost of Carrying Debt
Every dollar you send toward a monthly payment is a dollar you’re not investing, saving, or using for something meaningful. Over time, that missed opportunity adds up more than the interest rate itself.
Here’s what $300/month could look like if you weren’t using it to pay debt:
- Invested at 7% for 10 years: ~$52,000
- Used for travel: 1–2 international trips per year
- Saved for emergencies: financial peace + no credit card dependency
- Used to start a side hustle or business with no borrowed money
Debt doesn’t just cost money—it costs options. That’s what makes it dangerous.
“But What About Credit Building?”
This one’s tricky. Yes, you need a credit history to rent apartments, buy a home, or sometimes even get hired. But here’s the thing: you don’t need to carry debt to build credit.
- Paying off a credit card in full each month builds credit without interest
- Becoming an authorized user on a responsible account can help
- Secured credit cards can build history without big risk
The idea that you need to go into debt to prove you’re financially responsible is broken logic—and banks profit off that belief.
Debt is a Delayed Emergency
You might think debt gives you flexibility, but it actually creates risk. Why? Because it limits your future options.
If you lose your job, get sick, or face unexpected expenses while still juggling multiple debts, your entire financial life can collapse—fast. You’re suddenly one missed payment away from a credit score drop, penalty fees, or even collections.
So What Should You Do Instead?
If you’re already in debt (like most people under 35), the goal isn’t to panic—it’s to create a clear path out. Here’s how:
1. Track Every Debt You Owe
List balances, interest rates, minimum payments, and payoff dates in a spreadsheet or app.
2. Build a Mini Emergency Fund
Set aside $500–$1,000 before throwing everything at debt. This prevents you from falling back into debt for surprise bills.
3. Use the Debt Snowball or Avalanche
- Snowball: Pay smallest debts first for motivation
- Avalanche: Pay highest interest debts first for math efficiency
4. Cut Unnecessary Spending
For a few months, redirect your budget toward your freedom—not just your fun.
5. Track It All in One Place
Use a tool like YNAB (You Need a Budget) to track every dollar, every payoff, and every small win.
Debt-Free Isn’t a Dream—It’s a Direction
No one gets to zero overnight. But if you believe that all debt holds you back—even the kinds society says are “good”—you’ll start making different choices today.
Instead of chasing status or short-term comfort, you’ll be building power, peace, and progress that compounds over time.
Try YNAB free with my link here and start building your debt-free plan today.
You’re in MoneyMode now. No more normalizing debt. No more giving away your paycheck before you even earn it. This time, you own your future.
