The goal of almost everyone is to become "Debt Free". They just can't wait for the day that they don't owe someone money! But the rich look at debt in a different way. To the rich, debt is a good thing! The rich are always looking for more debt because they know how to take on Good Debt, and reduce their Bad Debt.

What is Bad Debt? - Bad Debts are loans that you have on items that do not make you money, such as your car, your house, big screen T.V., etc. Because these items do not make any money for you, you have to pay off those loans with money from your own pocket. The rich pay cash for almost all of their items, instead of taking on Bad Debt.

What is Good Debt? - Good Debts are loans that you have for assets that make you money. Getting a mortgage for a rental property is taking on Good Debt, because the tenants of the rental property are basically paying off the mortgage for you. No money comes out of your pocket to pay a Good Debt. Another example of Good Debt is getting a loan to start a business, and have the income from that business pay off the loan.

The rich take on Good Debt to buy income producing assets. The income from those assets pays off the debt. The poor take on large amounts of Bad Debt, and have to pay for the bad debt using money from their own pocket.

Michael Press is an investor and teenage entrepreneur. He currently owns and operates PassiveIncomeInfo.com, a free website with articles about how to build wealth.