The word “debt” typically carries a negative connotation — which makes sense when you consider all the debt Americans owe these days.

To give you an idea, about 43 million Americans owe a combined $1.2 trillion in student loan debt, and the typical U.S. household now owes more than $16,000 in credit card debt. So it’s not surprising that you probably hear a lot of talk about how bad debt is and how it will ruin your life and so on.

But it’s actually not that simple.

Good debt vs. bad debt

Yes, certain types of debt can “ruin” your life when it causes you financial problems for a long time and prevents you from reaching any of your big goals. But here’s the key: that scenario is caused by certain types of debt and how you handle it.

It may sound crazy at first, but debt isn’t necessarily a bad thing — it’s how you use it that’s good or bad. And if you use it the right way, debt can have a lot of benefits.

It sounds complicated, but it doesn’t have to be — you just need to know a few things about how debt works and how to use it in your favor.

Here’s a breakdown of everything you need to know about good debt vs. bad debt, dangers to avoid and how to use debt in your favor.