>> Production funding and educational outreach for Biz Kids is provided by a coalition of America's credit unions, where people are worth more than money.

A complete list of individual credit union funders is available at wxxi.org.

>> Every day, America's credit unions help members with their financial needs and with programs like Invest in America.

It's only fitting that credit unions support Biz Kids because financial education is what we do.

Learn more at lovemycreditunion.org.

>> Come on!

Come on!

Those zombie debt collectors are moseying almost as fast as we are.

Why do they keep following us?

>> Because-- I keep trying to tell you-- it's because you can't just run from debt.

It always follows you.

And if you run, it just gets bigger and worse.

>> Yeah, but we're just walking.

>> ♪ When making money is the aim ♪ These kids they bring their game ♪ They're the Biz Kids Can you dig it?

♪ They know what's up and let you know ♪ Just how to make that dough they're the Biz Kids Right on ♪ So learn a little more about bringing money through the door ♪ They're the Biz Kids Right on.

♪ >> If used properly, debt can be a good thing.

>> But when misused, it can get bad real fast.

>> And sometimes debt can get downright ugly.

>> A debt is when you've borrowed money from a lender and you haven't paid it back yet.

>> Good debt can be an investment that will pay you back in the future.

>> A business loan might be a good debt.

>> If the business succeeds.

>> Debt can be leveraged to improve your wealth and your life.

>> Taking out a loan for school could be an example of good debt.

It helps pay for your career.

>> Dropping out of school after taking out a loan is a bad debt.

>> Maxing out a credit card on video games is bad debt, especially if you can't pay it back by the end of the month.

>> Because debt isn't just the amount that you borrowed.

The lender is going to charge you interest, which is a percentage of the loan, plus add penalties if you're late making payments.

>> That total is your debt.

>> Debt is a tool that has to be used properly.

>> Use it wrong and things can go bad.

>> And when debt is bad, if you don't watch out, it can get ugly.

>> Ugly like this?

>> (screaming) Yeah.

>> Hi, I'm Jake.

I turned debt into money and I'm a Biz Kid.

One of the great things about being a farmer are the toys.

Big toys.

So I grew up through farm life and found out that's what I wanted to do.

My parents' farm wasn't meeting the needs for our customers, so I decided to expand it.

I needed a loan to pay for 2,000 raspberry plants.

We had to fill out a lot of paperwork, because I didn't have any credit.

And I was 16, so I didn't have any money.

The FSA loan was for $5,000, and it was able to pay for 2,000 raspberry plants.

You've got to stay on top of debt!

Now, the risk of taking on debt is, obviously, you don't pay it back, and the longer it takes for you to pay it back, the more interest that goes onto it, so you have to pay back even more money.

So the faster you pay it off, the better.

After two seasons of the raspberries producing berries, I was able to pay off the loan, and then this batch last summer was just pure profit.

I turned this into this.

After you pay off a loan, it feels good because, you know, you're not in debt anymore, and you're able to make money.

And that's always a good thing.

I'm a farm boy and a Biz Kid!

>> Farm boy here is an excellent example of the many good reasons to take on debt.

Maybe it's for business or going to school.

But you need to pay it back.

Bad debt is when you don't pay it off on time, or maybe you've collected too much debt, and that's when it can turn ugly.

It's kind of like championship horse jumping.

A good jump is kind of like good debt.

Hmm, that was a nice one.

But bad debt is kind of like a bad jump.

Oh, and if you don't stay on top of it it's going to turn ugly.

Oh, look out!

Oh, that's going to hurt.

>> Sir, would you say the trick regarding debt is to figure out which debt makes sense and is therefore good debt, and which doesn't make sense and is therefore bad debt?

And then managing the money one does borrow wisely?

Would you say that, sir?

>> Certainly.

I'd be glad to say that.

The trick regarding debt is to figure out which debt makes sense... >> No, that, that's not what I meant.

>> Debt is like cheese.

>> Cheese?

How is debt like cheese?

>> Well, when used properly, cheese gives us cheese nachos, cheeseburgers, and cheese pizza.

>> And debt, when used properly, can allow you to buy a car or get an education or even start a business.

>> But both debt and cheese can get bad.

When cheese is left alone for a long time, it can grow into a big pile of mold.

>> Oh, okay.

And debt, when used improperly and left alone too long, can grow into a huge, disgusting pile of collection letters and harassing phone calls.

And that's just the beginning.

>> But debt, when paid off at a reasonable time, can also allow you to do more with your life.

(growling) >> What was that?

>> All this talk of cheese is making me hungry.

>> Have some cheese.

>> No, I don't want that.

I want the one with the nachos.

>> No, nachos are mine.

>> No, give me the nachos.

>> Hi, I'm Capitalist Peg.

And let me tell you, I know a thing or two about debt.

If you don't manage it, debt can go from bad to ugly real quick.

>> Bonjour, Pegster!

>> Speaking of ugly real quick, Brian, what's up?

>> Well I wanted to get a fish and I knew I had to get an aquarium too, so I took out a loan.

Now I'm way behind on my payments!

>> Brian, call them!

>> I don't know the number.

can you give it to me, please?

>> It seemed like a quiet evening, but when you sign up for the detective game, you don't get quiet evenings.

>> Oh, Gus, I need your help.

>> Darla Dollar.

If beauty were buckolas, she'd be the richest dame on the planet.

>> I keep getting nasty phone calls and threats from collection agencies.

And I just don't know why.

>> So the debt dogs are after you, and you feel like someone's tied a bone to your back.

Doll, have you been paying your bills?

>> Well, of course I have.

Well, most of them.

Sometimes I forget.

>> Well, there's your problem, sweetheart.

You got to pay your bills.

It may be bad now, but it could get real ugly unless you pay off what you owe.

>> Oh, but it's been such a hard year.

There just ain't enough lettuce to go around.

And even less of it's coming my way.

>> Well, you tell that to the people you owe money to, and they'll work with you.

They'll make an arrangement.

>> You mean they'll drop the debt?

>> No, kid, once you borrow something, you got to pay it back.

However, if you start to pay off your debt now, hopefully some of those nasty phone calls will go away.

>> Well, if that's all it takes, I'll start making my payments today.

Oh, and, Gus, there's something else I want to talk to you about.

>> Yeah, what is it?

>> It's right over here.

>> Yo, what up?

This your home station K98 Jams hanging out with your girl.

I'm Tanisha.

I used to be in credit card debt, but now I'm finally free.

You got it.

Ya'll know what it is.

It's your home station.

Number one for blazin' hip-hop and R&B.

I was 18 years old when I got my first credit card.

It only took me about six months to max it out.

I bought a lot of things that a lot of 18-year-old young girls would buy.

So I had the coolest shoes when I was in school and stuff like that.

I had a lot of debt, I had a lot of high balances on my credit cards.

$2,000 balance at one point on one card.

A $750 balance on one card.

A $500 balance on one card.

I just had a lot of debt that I needed to pay off.

Coming up after the break, we going to get back into it.

I thought, hey, it's time to get a job, so I got a job.

And right now I am a full-time local DJ.

If you got anything you want to hear, hit me up on the jam line, and you know I got you, so keep it live.

I decided I needed to get a new car because I have to come to work, and I had to go to school.

With the credit card debt that I had, and the credit card debt that added up while I was purchasing a new car, it got even worse.

It's really easy to get into credit card debt and really hard to get out of it.

To pay down my debts, I figured that if I made extra monthly payments, then it could shave off years off my credit card.

Hey, Biz Kids, pay more than your minimum payment, and your credit card debt will start to go down.

Paying an extra $20 a month on a credit card that I had a $700 limit on shaved off three years of payments.

There is good debt.

There is bad debt, you know.

As long as you're paying on something, and you're paying it on time, good debt, that's raising your credit score.

Bad debt is collections, delinquencies if you're not paying your bills on time.

That's bad debt.

You don't want that.

I got that Get Big from The Row going out to all the Biz Kids out there.

>> I have a message about the credit card company I run.

Please think of us as very, very good friends.

Friends who say, "Take your time on paying us back on this, and this, and this, and this."

You really can't have too many friends, can you?

Thanks for your attention, and especially your interest.

>> Okay, Biz Kid, let's say you've got $5,000 worth of debt.

You've got your student loan, some credit card bills, and you haven't really been on top of your cell phone payments.

And you think you're doing all right because you're making the minimum payments, but you're setting yourself up for crossing from the good debt zone into the bad debt zone.

Here's how good debt can turn bad by only making minimum payments.

You're not really paying off your debt.

Soon you're paying interest on interest, which is called compound interest, and that's working against you.

Soon your debt is going to skyrocket.

You're going to be super-stressed.

You're not going to be able to sleep at night, all because of bad debt.

But here's where bad debt can turn ugly.

>> The unexpected happens.

You lose your job, you get in a car wreck.

All of these unexpected expenses can make it even harder to pay off your debt.

Soon you're dealing with nasty threats from collection agencies.

Your cell phone's turned off.

Your car's repossessed.

Some people have lost everything going from good debt to bad debt to ugly debt.

Do you know what this graph looks like?

A hockey stick!

So don't be a hockey puck!

>> Woof woof.

>> Talking Dog Detective.

>> Hover Puppy.

What seems to be the problem?

>> I need advanced flight training, but I can't afford the cost of school.

You got to help me, Talking Dog Detective.

>> I've got it!

Perhaps you should consider taking out a small student loan.

>> A loan!

I thought debt was bad.

>> Not necessarily.

Many dogs use debt to improve their lives or advance their careers.

You must have a plan to pay it back.

>> I can pay it back from my job polishing propellers.

Is that a plan?

>> That might be a good plan to begin with, but does your plan include a way to pay your overdue credit card bill?

>> Oops, my bad!

Ah!

>> You debt's bad now but it could get ugly.

>> Ah!

>> I'm Andrew.

I'm a senior in college, and I have over $40,000 in student loan debt.

A college degree can be a very powerful tool for you to have.

It's going to result in you making more money in the long run, and it's also going to give you more options in terms of what career path you want to take.

College is something that students go into debt for.

And going into debt is not a bad thing when you're going to get a college education.

A good level of debt is something that's going to be manageable to pay off once you graduate.

But you could also end up in the bad debt zone if you're not careful by not shopping around for the cheapest loans or by spending too much money while you're in college.

This weight represents my combined debt through senior year.

Whew, what a workout!

The main ways that you're going to fund college is through either savings that you have before college, loans that you're going to get in order to go to college, scholarships that you can apply for for college, and then potentially having a job while you're in college.

For my first couple of years I had a combination of scholarships and loan money.

My loan money was through SallieMae, which is a financial institution that lends out money.

But after a couple years, I went back and checked how the interest rate had changed, and it had actually gone up significantly.

And I ended up finding out that my hometown bank had much lower interest rates.

And in the long term, I found out that I've saved thousands of dollars.

You can stop good debt from becoming bad debt by being a good loan shopper.

Now that I'm getting ready to graduate, I have to think about my financial future.

Because I've taken the steps that I have in college, I've been able to keep my level of debt in the good debt zone.

Hey, Biz Kid, don't let a loan own you.

>> Time to start paying our student loan!

Woohoo!

>> Now, before we start today's lesson on debt, I want you all to take a look out the window and check out my new car.

Oh, that is one sweet ride.

I've got it all tricked out.

Just check out me in my dream Euro hoopdee!

The thing is I had to borrow a lot of money to pay for it.

But see, that's what money is for-- to live the good life.

And we'll be talking about that today... whoa!

What're they doing with my car?

>> They're taking your car.

>> Substitute teacher, have you been making your payments?

>> Well, yeah!

No, I mean, occasionally, when I can afford it.

But, I mean, look-- I make this a cooler town just be driving down the street in that car.

They should be paying me!

>> I don't think they see it that way.

>> Maybe you should drive a car you can afford.

>> Repo man!

Repo man.

Look, I got to go get my car back.

Just...

I'll be right back.

Do your math problems.

Repo Man!

You get away from my ca... >> Cash Cow here.

I avoid getting into trouble with debt, because I mostly pay in cash.

Works for me.

>> Debt is a tool that has to be managed.

Now, nobody wants to be bound up in debt, so the key is to have a plan.

Now, I just so happen to have a plan and... ...a key.

So, the first part of your plan is to make a budget starting with your monthly debt payments.

Now, what you need to do is examine your spending habits, examine your monthly expenditures, see if you have any unnecessary expenses and drop them cold.

>> This has the effect of removing any unnecessary spending from your budget so you can pay your debt off even faster.

Of course, none of this is really going to work unless you focus on saving more than you spend.

That's very important, as you have a little bit of money left over at the end of every month to help pay off your debt.

>> Now try to avoid using a credit card.

Pay in cash.

If you can avoid temptation, that's good.

And if you can't, cut up your cards.

That way you can't use them.

Now if you really want to speed things up, try getting a job or another job.

And before you know it, you're debt-free.

>> Now, that was not a magic trick.

That was a magic trick, and that takes years of dedication and practice.

Making a budget does not.

Now for my next trick I am going to pull a rabbit out of this hat.

>> Oh!

>> It's from a collection agency.

>> Go on, read it.

>> It says here that you're behind on your payments >> Well?

>> Things are so ugly you're bankrupt.

>> This is my lean, clean, profit machine.

Maybe I need to just tell people who is Pure Clean.

We're primarily a carpet cleaning company.

You can drink our products.

You can get them on your skin.

Everything is natural, and our clients really appreciate that.

Now I own a successful carpet cleaning company and make great money.

But five years ago, I was flat broke.

So when I was 19 years old I got into the mortgage industry.

And I did well with it.

I made good money in the beginning.

When things were going well, things were going good.

And I knew that I had great credit, and I was able to go buy literally whatever I wanted to.

And I did.

I bought a BMW because I love BMWs.

I was able to buy TVs and couches.

I mean, if you have money, it feels good to spend it.

But then I ran out of money.

I ran out of the ability to pay the people back that I had borrowed money from.

Which led to me ultimately being bankrupt.

At the time that I went bankrupt, I'd estimated about $70,000-90,000 I had acquired in debt.

Every morning I knew my phone was going to ring.

And I knew who was going to be calling.

It was my creditors calling to collect their money.

Hello?

>> Hey, Ben, you owe us a lot of money and you haven't paid us.

And you're gaining more and more fees for not paying us.

And we're shutting off your phone and we're taking your stuff for not paying us.

And we're kicking you out of your house.

So when you going to pay?

Huh?

Huh?

When you going to pay?

>> I... you know, I'll send you a payment as soon as I can.

I'm really sorry.

And it's scary because you know that you're going to lose everything that you've worked for.

Lost my car.

We had to move out of our apartment.

It was bad.

The result of going bankrupt left me without the ability to move forward, to be able to start a new business.

I couldn't get any loans.

I couldn't go to a bank and say, "Hey, I'm trying to start this company" because of what had happened previously.

They weren't willing to take that risk.

It took me three years to go from flat broke to being back where I was before any of it started.

I started with the basics, and then I grew.

Then I grew again.

You don't necessarily have to eliminate your debt, because debt's good.

It builds your credit score, showing that you can pay those debts back.

I've got debt now at the company.

It's good debt, though.

It's allowed me to grow my company.

The biggest lesson is don't spend money that you don't have.

Keep money in the bank so that if I need to wipe out my debt for any reason, I can write a check and my debt's gone.

How's that?

>> I am wearing a new pair of shoes that I bought on a credit card.

That poor decision, plus a bunch of other debt, is killing me.

And so are these shoes.

>> And now Debt Li in Five Fingers of Debt.

>> Ha ha ha.

With this high speed internet and my credit cards I can get anything I want.

I want more.

More!

More!

>> Stop!

Your credit card abuse must stop before all is ruined.

Give me the cards now!

>> Cards!

>> Remember kids, use credit responsibly, or debt will damage you.. >> Oh, great deal!

I should get a credit card and buy this baseball glove I want online.

>> Yeah, get a credit card and then you can buy a video game, the glove, and you can get a present for your ma.

>> Sounds great.

>> Yeah, hold on a minute.

Why exactly do you need a credit card?

What's the big emergency?

>> Oh, here we go.

>> Well, I just want to get this stuff right now.

>> Yeah, yeah, do it.

You can apply online.

I've got an app on my phone that you can use.

>> Hey, credit card means credit, which means debt, which means you're making a deal with the devil.

>> Why do you have to bring that up?

Look, bottom line, kid, get a credit card, you can get anything you want.

>> And you could end up paying more for those things than you ever thought possible.

Now, you've got to ask yourself, is getting that glove worth getting into debt for?

Or could you make a budget, save up, and pay cash?

You don't have to worry about paying interest and getting into debt.

>> That makes sense.

>> Look, get a credit card, get the glove, the video game, and then forget about the present for your ma's birthday.

>> That's horrible!

>> Hey, I'm the devil.

>> Pa, our debt's so bad, we're pret'near underwater.

>> We are the Ferrer family, and we paid down our debt.

>> I've had credit cards since I was about 19 years old.

>> Here you go, Mom.

>> I was doing pretty good, and then just started getting increasingly in debt.

We bought a house.

We got cars.

Everything was name brand.

Everything was brand new.

Nothing was on sale.

>> Before I moved in with my aunt and uncle, I went shopping a lot.

Like most teenagers, I like to shop.

>> Eventually the credit cards got to the limit.

That's when things really got bad.

>> Our family had some ugly debt.

>> It will do some terrible things if we misuse it.

>> Why are you saying it like that?

>> Being in debt was really hard because you knew there were certain things you couldn't do.

All your friends were, "Oh, we're going to go to Laser Tag."

I'd just be like, "Oh, I know we're not going to be able to do it.

There's not enough money."

>> By this time my credit card debt was $41,000, and that was four years ago.

There was no Christmas that year.

We didn't buy any gifts.

We didn't put up a tree.

We didn't do anything.

When I first decided to call Clearpoint Financial, once I gathered my bills and put all that information in, the very next day I got a phone call from my online representative.

And then he helped me kind of decide how to go about getting my debt back in line.

I just started crying, because I was just so relieved that I had taken that first step.

>> We work together a lot.

I'll do the yard work so we don't have to pay somebody to do the yard work.

>> We had a dog.

Instead of taking him to the groomers, we would do that ourselves.

>> Taking public transportation, as opposed to paying $75 a week to fill my truck up with gas.

It cost $25 a week for me to catch the train back and forth.

>> Everybody makes sacrifices.

We can't always have that $50 name brand thing.

It's okay to get the cheaper one.

>> Instead of buying my kids' lunches every day, they could make their lunches.

>> My mom's plan is very successful, because by the time I'm a freshman in high school, we will be out of debt, and that's going to be a really exciting thing for us.

>> We've paid it down over the years, the same amount monthly, and we are now down to $9,000.

We should be done paying for that by the end of this year.

>> Hey, Biz Kid, if you're in debt, make a plan, pay it down, and get out.

>> Debt can be as ugly as this.

>> And now it's time for another Biz Kids Biz Quiz.

If you said A, where you been, loser?

The correct answer is B and C. Keep your debt small and pay if off on time.

>> ♪ Oh, oh, oh, oh, oh, oh I love you so, oh ♪ But it's really hard, debt to be in love, oh with a credit card ♪ Want to be your only guy, oh until the end, debt ♪ When you are with me I just want to spend, debt ♪ When I'm with you, oh I don't need cash, debt ♪ But I get your bill, oh and I get a rash, debt ♪ My love for you, oh puts me in debt, debt ♪ I just hope my mom hasn't found out yet, debt ♪ Oh, oh, oh payments, payments, payments ♪ I got to make more payments, payments, payments ♪ I'm owing big payments, payments, payments and I've fallen way behind ♪ I make big money singing for the girls ♪ Even though my voice sounds like a squirrel's ♪ If I don't get this big balance paid ♪ I'll pay interest 'til I'm 48.

♪ >> So debt could be good, bad and ugly.

>> Good debt might be used for starting a business, if that business succeeds.

>> Bad debt could be like maxing out a credit card, maybe maxing out three, and putting financial stress on your life.

>> Ugly debt is when your debt is out of control, and you're heading to financial ruin.

>> I like the hockey stick/cheese analogy.

>> The hockey stick/cheese analogy?

>> Yeah, use your debt correctly, and you won't get stuck in the penalty box with the moldy cheese.

>> That was so fake!

>> Ha!

>> Here's how good debt can go from bad debt to... argh!

>> Watch Biz Kids on this PBS station.

>> No, don't do it.

>> Don't listen to him.

>> Throw your money away.

>> No, no, seriously, don't listen to him.

>> Isn't there something you need to buy right now?

>> Watch Biz Kids.

It's awesome!

>> Oh, cheese touched.

>> My Uncle Larry always believed that everyone should live within their budget even if they have to go into debt to do it.

He also believe in leprechauns, unicorns, gnomes, fairies, elves, and that he could fly.

>> Need some more bites of Biz?

>> Check out our Web site.

>> If you have your own business, we'd love to hear about it.

>> Plus, we have resources that can help you.

>> Just click on BizKids.com >> And let's get down to business.

>> Some Biz Kids business.

>> Production funding and educational outreach for Biz Kids is provided by a coalition of America's credit unions, where people are worth more than money.

A complete list of individual credit union funders is available at wxxi.org.

>> Every day, America's credit unions help members with their financial needs and with programs like Invest in America.

It's only fitting that credit unions support Biz Kids because financial education is what we do.

Learn more at lovemycreditunion.org.

Captioned by Media Access Group at WGBH access.wgbh.org