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Debt
Money you owe to a lender. Useful for the right purchase, painful for the wrong one.
Example
Two friends each take on $5,000 of debt. One uses it to start a small repair business that makes $1,500 a month. The other uses it for a holiday and a new wardrobe. A year later the first one is ahead. The second one is still paying.
How it fits in
Debt is not all the same. A mortgage on a sensible home or a loan that grows a profitable business can earn its keep. Credit-card debt run up on everyday spending almost always costs more than the things it bought. The first question to ask any debt is what it is buying, and whether that thing will outlast the payments.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.