New Delhi, July 4 -- In the world of personal finance, "debt" has a negative perception. However, not all debt is necessarily destructive for you. The answer is a bit more involved; some forms of borrowing can actually create wealth while others pose a more stealth risk to your financial health.

Reducing your chance of financial stress in the long run and making informed decisions about borrowing starts with understanding good debt vs bad debt.

Simply put, in essence debt is money that is borrowed, which you pledge to pay back over a period, usually with interest. Whether this borrowed money is good debt or bad debt, it depends on how it is used and any terms attached to it.

Good debt is borrowing money to purchase something that can e...