When in debt, it may be hard to consider what is debt and what isn’t.  What is a lender going to look upon when they are trying to figure out if you qualify or not for a new loan, mortgage, etc.  Every debt will vary on how someone looks at it.  Yes, there is a good debt and for example, a mortgage is a good debt in my eyes.  Since your home appreciates in value (usually), you can sell for more than what the mortgage is worth.  This in turn, leaves you without any debt. 

Unlike a credit card, that debt is there to haunt you and you can’t really sell anything back to offset your bills.  Well, I suppose you can but you’re not generally going to get 100% of your money back.  I would say you’d be lucky to get back 50%.  When it comes to types of debts you may have, let’s take a look at what you may have and if I view it as good or bad.

Mortgage:  As I already mentioned, a mortgage is a good debt.  In the past, your home would appreciate and yes, I know the market is different today but things will come back sooner or later since our markets work in cycles.  If the worst case scenario hit you, you could always sell off your house and wipe away this debt.

Automobile:  An auto loan is generally debt that is in between.  Since your car loses it’s value right when it leaves the lot, it’s hard to sell the car and get back all the money you have to pay back on the loan.  Is it as bad as credit card debt?  No but it’s debt that will have to be paid off sooner or later.

Credit Cards:  Credit cards are the worst kind of debt that you can have in my opinion and can be very dangerous.  If you can’t control your spending, I would recommend you look into a prepaid based credit card that can help control your spending.  Unlike an auto loan and mortgage, it’s tough to pay of credit card bills if you don’t have the money.  Since most of the stuff you buy with it loses its value fast like clothes, food, etc, its hard to sell anything to get your money back.

Student Loans:  Loans like this once again are bad in a way but you’re investing in yourself.  Who’s to say that if you didn’t get the loan, you would be making $20,000/year compared to $50,000 a year today.  Do you see where I’m getting at?  Yes, loans do stink but when it comes to education, you can’t frown upon them.

Debt can be everywhere.  I say as long as you owe a balance of over $500 or more, it’s something that you need to work toward.  Owing money to your Grandma isn’t really a debt since she probably won’t report you to the credit agencies.  When it comes to your credit score, they don’t care if its a mortgage, auto loan, etc.  If you owe money, it’s going to be called debt.