Step 2: Eliminate Bad Debts

The 2^nd step to financial freedom is eliminating bad debts. First of all, debt is not necessarily always a bad thing. Indeed, there can be such a thing as ”good debt.” Let’s look at a simple definition of Good Debt and Bad Debt.

• Good debt has an asset attached, usually positive cash flow and is tax deductible. Good Debt is Debt that is typically being paid by someone.
• Bad debt does not have an asset attached and is usually consumer debt and is not tax deductible. Bad Debt is typically paid by you.