There’s a lot of buzz these days around good debt vs bad debt—but is there really a difference? And once you define your debt, how do you best manage it for future success?

It sounds like an oxymoron; what exactly is good debt?

Any debt that is associated with an asset is considered good debt. Basically, if it helps you move forward to meet your goals while increasing your income or future net worth, it can be looked at as good debt. For example, a home mortgage is connected to a home, which is an asset. Or student debt is attached to you, the student, and furthering your education to earn more or expand your knowledge is obviously a good move for your future. After all, you are your greatest asset.

A good rule of thumb is anything that will help you grow and better yourself and your situation can be considered good debt. This is not a free pass to rack up “self-care” debt. It’s still important to assess how much debt you take on. You don’t want to stack up debt if you can’t afford to pay it off, in addition to everything else you want to achieve.

That’s why it’s just as important to have a plan of attack on good debt, even if it’s not labeled, “bad.” For example, if your housing costs are becoming unmanageable, can you refinance, downsize, or potentially move into a more budget-friendly neighborhood? Or if you feel overwhelmed with your student debt, are there repayment options you can consider that would work better for your financial situation?

When it comes to any type of debt, being proactive is the most important factor in paying it off. There is a fine line between this scenario and spiraling out of control into what can be labeled, “bad debt.”