This weeks video was the difference between bad and good debt.
Link to BTN video http://www.abc.net.au/btn/story/s4663455.htm
It’s something that’s getting talked about a lot, budget. It something that worries people it hangs to keep on coming back and back especially when people don’t want it to. Debt is where you borrow money from the bank, where you can buy stuff sooner but you still have to pay it back. Nearly every country in the world is getting consumed by debt including our Australia. That’s because of the government, people like us can get loans from the bank. It does that so they can pay for buildings/company, schools, roads and highways and education. But debt keeps growing on you like a creature and gets interest. It keeps getting bigger and harder to pay if it isn’t paid back. For a while the government has been saying it shouldn’t be in so much debt and it’s been trying to get back surplus. That means there’s money left over after paying for everything in the budget. After it isn’t easy so it means cutting spending. Now Scott Morison the treasurer said Australia should start looking at the debt a bit different- sometimes good and sometimes bad. So what’s the difference, well generally debt is bad by giving lot’s back. Like buying loads of stuff on a credit card that’s likely to lose its value and not make you any money in return. On the other hand, debt is considered to be good when your purchase is likely to grow in value or make you money in the future. Australians understand that taking out a mortgage to pay for their home is a wise investment for their true future. But they also know that putting your everyday expenses on your credit card is not a good idea. And that is the difference in good and bad debt. But when it comes to good and bad government debt it’s a bit more complicated. The government thinks good debt is where you borrow money for buildings and infrastructure. That’s things like roads and railways. It says it will help the country, and it will help businesses grow and be successful. But the government thinks borrowing money for different things is bad debt. One example is welfare payments, the system that helps a lot of people that are too old to work, disabled and unemployed. To rack up government debt to pay for welfare payments and other everyday expenses is not a good idea.
That’s got some people worried that if those areas are seen as bad debt, they might end up with less funding.
But the details are all under wraps until the budgets released, so we’ll have to wait ’til then to find out more about what this guy’s going to get up to over the next few years.
I know understand that budget is something that can keep on coming back and can change what and how you pay. Also there two types good is where they use it for buildings, roads, education and people’s health. And bad debt is using it for other things which don’t help and create a running system.
How long has debt been around for?
How many people owe debt each year?
Which countries have debt?