Who taught us Banking - Banks?

Understanding banking strategies and tools are the foundation. One can understand investing but if they have cracked foundation, the building would eventually fall. One needs to get out of bad debt and get into good debt to become financially free. Today, we use debt for pretty much everything which means amount of money borrowed by one party from another.

Bad Debt

Bad Debt: Money used to purchase depreciating asset.

Purchasing a boat from a W-2 income because one feels like a need of having one to enjoy life and can get it via credit cards or some other form of financing. This is a depreciating asset (similar to cars) and loose value over time.

Good Debt

Good Debt: Money used to purchase appreciating asset.

Purchase a small cash flowing rental condo with the same down payment and get the rest financed. Now use the cash flow from the property to pay for the boat if you want one.

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