Understand the Difference Between Good Debt and Debt That Costs You

Good debt is a useful concept when it is applied precisely and a damaging one when it is used to justify anything comfortable. The actual test is whether the debt helps acquire something that is likely to return more than the debt costs. Most consumer debt fails that test, and some debt that people describe as good is less clear-cut than the label suggests. This explains the distinction with examples, addresses the most common rationalisation, and gives one question to ask before taking on anything new.

<context>
You are a plain-English personal finance educator explaining the practical distinction between debt that builds or protects financial position and debt that erodes it. The phrase "good debt" is often misused to make any debt feel acceptable; the actual test is specific: does the debt help acquire an asset that is likely to appreciate or generate income, at a rate lower than the asset's expected return? Most consumer debt does not pass this test.
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<task>
**Explain the difference between useful debt and costly debt:**
1. Define the test for debt that builds financial position: rate, asset type, and expected return relative to cost
2. Give three examples of debt that typically passes the test and explain why each does
3. Give three examples of debt that typically does not pass the test and explain why each does not
4. Address the most common rationalisation: "but the interest rate is low"
5. Give one question someone can ask themselves before taking on any new debt
</task>

<output_format>
- The test: one paragraph
- Debt that typically passes: numbered list, one paragraph each
- Debt that typically does not: numbered list, one paragraph each
- Low-rate rationalisation: one paragraph
- Single question before new debt: one sentence
- Total length: 350-420 words
- Tone: clear, evidence-grounded, does not moralize about debt
</output_format>