PEDESTRIAN.TV have partnered with ANZ, who this article is brought to you by, to improve your financial wellbeing.

Debt isn’t a dirty word. There, we said it.

No longer should we feel guilty for having a little (or a lot) debt to our name because, honestly, we’ve all been there. Before you get too excited, we’re not about to encourage you to sign up for new credit cards and treat yourself to that designer bag you’ve had your eye on but absolutely cannot afford. Oh no, no, dear friend.

Today, we want to talk about a little thing called good debt. Yep, there’s a good kind and if you stick to those (while living within your means), then you might just be setting yourself up for a lifetime of success.

Here’s the deal: good debt is the kind that has the potential to increase your net worth over time, and bad debt, well, that’s the stuff that you’ve blown your money on, regret immediately and never see another cent from.

To get the lowdown on exactly what constitutes ‘good debt’, we tapped ANZ to find out what they tell people in the free ANZ Financial Wellbeing Challenge, which basically teaches you how to get on top of your money.

Good Debt #1: A Mortgage

If our parents have taught us anything, it’s the earning potential of getting into the housing market. For that reason, a mortgage is probably the biggest but also the most valuable debt you’ll ever have in your life. In short: a huge outlay (and debt) means a huge return.

Good Debt #2: Your Education

Of course, there is a lot of room for critique around how much education costs and the difference between different courses (A LOT). But it’s a fact that your student loan (while annoying) is one of the most valuable debts you’ll have in your life and the reason for that is two-fold: first, it’s the lowest interest loan you can get.

Secondly, in many industries, it’s a mandatory requirement of entry, so it’s quite literally getting you to where you want to be if your dream is to be, say, a health professional, engineer, or teacher.

Good Debt #3: Starting A Business

Getting into a certain amount of debt to help you open a business that will make you money, in the long run, is a positive thing, and for many, the only way of kicking off their dream gig. There’s some nuance in this one, but we’re trusting you to know the difference (or find the right advice to help you tell the difference) between a healthy amount, or too much.

How To Turn All Your Debt Into The Good Kind

Before you figure out whether you’re living in the land of good debt (or have some serious work to do), it’s important to figure out how much debt you actually have in the first place. According to ANZ, the first step is to make a list of all your debts — including bank or student loans, store credit cards and buy-now-pay-later accounts. Next, figure out which category they fall into, so you can start making a plan to pay them off, prioritising things like credit card debts accumulated by buying non-essential items.

To get cracking on knocking out your debts, check out ANZ’s Financial Wellbeing Challenge, which helps you figure out where your finances are currently at and how to kick those financial goals.

You can sign up for the ANZ Financial Wellbeing Challenge here

This article was published by Pedestrian, sponsored by ANZ. Advice does not take into account your personal needs, financial circumstances or objectives. Consider if right for you.
Image: Confessions of a Shopaholic