Credit and debt have become dirty words in a financial climate where everyone is tightening their purse strings. The stigma of credit or debt does not have to be seen in this way. Even the most sucessful institutions have a credit flow without which, prospective speculation would not be possible. So, as an individual this rule also applies. Good debt is a loan which will eventually generate a return or will enrich ones prospects. For example: Investing in education, Investing in a business opportunity. A mortgage or a loan for a vehicle can sometimes be seen as good debt but there are always exceptions hence we will call this grey debt, for instance where the cost of the property or vehicle is excessive in proportion to ones earnings. A vehicle may offer the purchaser the opportunity to travel further to a place of work, therefore may improve prospects. A mortgage may return a profit if the investment increases in value.  Bad debt is any debt which is eventually unsustainable. Millions of people worldwide subsidise their incomes with debt and spend in excess of what they actually earn. Often this kind of debt is caused by people living beyond their means. Often (but not always) a result of consumerism and people buying things which they do not need and otherwise could not afford. Bad debt is often masked in denial from the debtor.