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Debt Quality Assessment Guide

Efficient Debt Management#

This process involves assessing the quality of your debt to ensure it is productive and contributes to wealth building. By evaluating the percentage of debt expected to yield 5% or more, you can categorize it into different quality levels to manage your financial health effectively.

Step 1#

Determine the quality of your debt by calculating the percentage of debt expected to yield 5% or more, categorizing it as productive.

Screenshot 1

Step 2#

Evaluate your debt quality:

  • A percentage of 50% or higher indicates strong (green) debt quality.
  • A percentage between 25% to 50% is considered fair (yellow).
  • Below 25% is classified as weak (red), suggesting that higher quality debt should be utilized for wealth building rather than consumption.

Screenshot 2