GOOD DEBT

LEARNING OBJECTIVES
S T U D E N T S E VA L U A T E W H E T H E R T H E R E
IS SUCH A THING AS ‘GOOD DEBT’
THINKING
STARTER
• Is debt bad?

https://www.mentimeter.com/app/presentation/3b0bc
1028019f6f0dc95acdd1ab8d4e4/c9acef8fb838/edit
 TASK:
• You are going to be shown some
scenarios. Your task is to evaluate
whether they are ‘good debt’ or ‘bad
debt’.

You do not need to write them down.

Instead, you will discuss whether they
are good debt or bad debt with a partner,
and share your ideas with the class.
 • This is Laura. She just finished high school. Laura loves
taking care of people.

• She has been offered a job working in a care home,

helping elderly people. The job pays $40,000 per year.

• She is wondering whether to study nursing at university.

The course lasts 4 years and will cost her about
$30,000, which she will need to borrow. When she has
a nursing degree she will earn about $80-90,000 a year.

Is it good debt or bad debt to borrow the money

($30,000) to complete the course?
• Sophie has always wanted a Gucci
bag! She was just approved for a
new $5000 credit card, so she used
the credit card to buy the bag of
her dreams.

• She plans to pay the credit card off

with $20 a month.

• Is this good debt or bad debt?

• This is Matthew. He just opened his own coffee
shop. Business is booming and he’s making
$100,000 a year as busy office workers stop by
to get their coffee on the way to work.

• Matthew wants to open a second outlet at a

different location, but he doesn’t have enough
spare money upfront to fit out the coffee shop
with fridges, counters, and coffee making
machines (the cost will be $50,000)

• Is it good debt or bad debt for Matthew to

borrow $50,000 to open a second branch of his
business?
•Caleb drives a reliable Corolla, but he
has always wanted a Holden HSV
because his friend Gary has one and its
fully-sick and Gary is cool because he
does burnouts. Caleb will need to
borrow $45,000 to upgrade.

•Isgood debt or bad debt for Caleb to

borrow the money to buy his dream car?
• John and Martha are currently
renting a 3 bedroom house for
$400 a week.

• They want to buy their own home,

but it would mean borrowing
$400,000 for a mortgage. To pay
off the mortgage will cost them
$400 a week for the next 30 years.

• Is it good or bad for John and

Martha to get $400,000 in debt to
buy a house?
•Kim drives a 30 year old Corolla, but
it has broken down and cannot be
fixed. Kim needs a car to get to work;
there is no public transport from the
remote location where she lives. To
buy a reliable second-hand car she will
need to borrow $10,000 which she can
afford to pay back over 3 years.

•Isit good debt or bad debt for Kim to

borrow the money to buy a reliable
car?
5 mins - Discuss with your
partner what the difference
between good debt and bad
debt is.

Write down your answer

and be prepared to share
your answer with the class.
 KEY TAKEAWAYS
• Good debt is when the thing you’re buying
enables you to earn more money or has the
potential to increase in value over time.

• Bad debt is when you borrow money to

purchase things that rapidly go down in value
over time (e.g clothes, technology) or only for
the purpose of consumption.
 TASK

Create
You are
two scenarios like the
ones we reviewed earlier;
one which exemplifies good
debt, and one which
exemplifies bad debt.
• Isdebt always
bad?

https://www.mentimeter.com/app/presentation/3b0bc
1028019f6f0dc95acdd1ab8d4e4/246956319a07/edit
 REFLECTION

S U M U P W H AT Y O U ’ V E L E A R N T TO D AY I N E X A C T LY 7
WORDS.
T H E R E I S A L O L LY F O R T H E B E S T A N S W E R !