Debt comes in good and bad: two things to look at
Many people think "being in debt = bad," but debt comes in good and bad varieties too. To tell them apart, look mainly at two things: whether the interest is high, and whether the money is pure consumption or could bring a return.
Bad debt: high-interest debt borrowed purely to spend, with no return at all. A classic example is certain high-interest consumer installment plans—you borrow to buy something that quickly depreciates or gets used up, while the interest keeps gnawing at you.
Relatively "good" debt: lower-interest debt where the money has a chance to bring a return greater than the interest (for instance, certain low-interest borrowing used to build skills or long-term assets).
High-interest debt is like a leaking hole—usually plug it first
If you're carrying several debts at once, a common approach is to tackle the one with the highest interest first, because the higher the interest, the faster it "eats" your money.
For example: say debt A charges 18% a year and debt B charges 4%. When you have some extra money, paying down A first is usually the better deal—because the extra interest A devours each year far exceeds B's. Plugging the high-interest hole saves you real, solid interest.
The emergency fund: life's airbag
An emergency fund is money set aside specifically, left untouched in normal times, to handle the unexpected (job loss, illness, urgent repairs). Its job is this: when trouble hits, you don't have to take on high-interest debt or dump assets at fire-sale prices.
The common target is enough to cover roughly 3 to 6 months of your living expenses. If you spend 5000 a month, your emergency fund target lands roughly in the 15000 to 30000 range. This is a starting point, not an iron rule—the more unstable your income, the heavier your family obligations, and the more you rely on a single source of income, the more you should lean toward 6 to 12 months.
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Which option comes closest to the typical traits of "bad debt"?
答案：High interest, borrowed purely to spend, producing no return at all
The core of bad debt is high interest plus pure consumption with no return, with interest steadily eating your money. Low interest with possible returns is relatively "good" debt; size or the presence of interest isn't the core test.
The common target size for an emergency fund is enough to cover about 3 to ______ months of living expenses. Numbers only.
答案：6
The common size for an emergency fund is enough to cover roughly 3 to 6 months of living expenses, as a cushion for emergencies.
Suppose you spend 4000 yuan a month. Using the "6 months of expenses" upper-bound target, your emergency fund should be about ______ yuan. Numbers only.
答案：24000
4000 times 6 equals 24000. So with a 6-month target, the emergency fund is about 24,000 yuan.
You've got some extra money, while carrying debt A at 18% a year and debt B at 4% a year. The common and more cost-effective move is:
答案：Pay down debt A at 18% first
The higher the interest, the faster it eats your money. Paying down high-interest A first turns saved interest into a certain return, usually a better deal than keeping it.
True or false: One purpose of an emergency fund is so that, when trouble hits, you don't have to take on high-interest debt or dump assets at fire-sale prices.
答案：True
An emergency fund is exactly the cushion for emergencies—with it you won't be forced to borrow high-interest debt or sell assets cheap when you suddenly need cash.
True or false: Because all debt is bad, any borrowing at any interest rate should be repaid in full immediately, at all costs.
答案：False
Debt comes in good and bad. With multiple debts you usually tackle high-interest bad debt first; low-interest debt with possible returns shouldn't be lumped in—and you also need to keep an emergency fund. Blanket immediate repayment isn't always optimal.