What do the labels usually mean?
Good debt is generally described as borrowing that buys something which grows or earns. A mortgage on a house, a loan for equipment that produces.
Bad debt is borrowing that buys something that loses value or produces nothing. Cards, a truck beyond what the work needs, a holiday financed over three years.
Why is that distinction not enough?
Because it describes the purchase rather than the position.
A mortgage is called good debt. A mortgage at the top of what a bank will lend, on a single income, with no reserve, is not a good position no matter what the label says.
A small card balance is called bad debt. Cleared in two months, it barely registers.
The label tells you about the item. The risk lives in the size, the term, and what happens if the income stops.
What about business debt?
One thing matters more than the rest: whether you personally guaranteed it.
A guarantee means it is not business debt. It is your debt, waiting behind a company name. If the business goes, the obligation walks straight into your house.
Men leave this out when they list what they owe, which is exactly how a number gets calculated that looks better than the truth.
What questions actually help?
Three.
If my income stopped tomorrow, how long can this debt be serviced from what I hold.
Does this borrowing produce something that pays more than it costs, and can I show that rather than assume it.
And is any of this secured against something my family lives in or on.