What is generally considered a good debt?

Debt for education or home purchase is generally considered good debt because it is associated with significant long-term benefits. When individuals take on debt to finance their education, they invest in their future earning potential. A good education typically leads to better job opportunities and higher income, enabling borrowers to repay their loans over time.

Similarly, debt incurred for purchasing a home is seen as good debt because real estate often appreciates in value, building equity for the homeowner. This type of debt can be a strategic financial move, as homes can serve as assets that contribute to wealth accumulation.

In contrast, the other types of debt listed often do not provide the same level of financial return. Debt for purchasing clothing or dining out typically does not generate long-term value and can lead to financial strain if not managed properly. Similarly, debt for vacation expenses does not contribute to asset growth and is primarily a liability.