Good Debt vs. Bad Debt
All businesses have debt! Even the most highly profitable business such as Cisco and Microsoft have billion of dollars in debt. Only dilettantes do not to have debt.
Debt, in itself, is not bad. Debt allows you to raise cash for specific projects, for operating,...
- Debt or borrowing that will help generate income is good.
- Debt or borrowing that will not help generate income is bad.
- Borrowing from your credit card will be either good or bad depending on what's your interest rate. Some credit cards have very low interest rates, such as prime+2 or the prime rate + 2%
If you are in the photography business and you borrow, from your bank or from your credit card, to buy or to replace a business camera, that's a camera used to earn money. Then debt is good. It's better than no debt and no camera therefore no business.
If you buy an exotic piece of glass because: "I've always wanted to have a 220 degree fish eye", then borrowing is bad. Last year, I just did that: after hard bargaining I bought an old Albinar 9mm 170 degree fish eye for the grand total of $111. No automatic diaphragm, no auto focus, it huge, heavy, everything is manually set. Albinar was a one-man marketing/importer in New Jersey. When the owner died in the early 1990's, the company closed down. I got it just because I wanted to have a fish eye. I could always sell photos with that!
Yeah! Right! Do you know how many photo I have taken? Less than a hundred. Do you know how many I have sold: 0, Zero, Nada, Nothing. Luckily I did not borrow any money or I would still be spending money paying for it and for the interest.
Don't throw good money after bad, try throwing good money at generating income.