Personal Finance

Bad Debt

Definition

What is Bad Debt?

Borrowing for consumption or assets that do not support repayment, especially at high cost.

Example in practice

High-interest debt used for discretionary spending can weaken investment capacity.

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Money set aside rather than spent, often for emergencies or future goals.

Liquid savings reserved for unexpected expenses or income disruption.

Total assets minus total liabilities.

Annual portfolio withdrawals divided by the portfolio's starting or current value.

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