I don’t believe in “good and bad debt”. Debt is debt is debt is debt. Whether it’s out of necessity or due to a sudden lost of sanity, borrowed money is a liability that needs to be paid back.
The granddaddy of “good debt” is, of course, a mortgage. Most home buyers couldn’t buy a house without one, so it made sense to justify it by shedding a good light in this type of borrowing. Unfortunately, so many people take it the wrong way and end up buying a house that’s unaffordable. Debt is debt is debt is debt no matter how you look at it. Remember it on your road to financial independence.
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Thanks for the link – and for the reminder.. debt is debt is debt.
As usual you’re right on the money. The entire world has been affected by the current economic meltdown but unlike the USA, many people in Europe and S. America own their homes free and clear and despite their higher unemployment rates, they’re in better shape to weather the storm. You can scale back on restaurants and entertainment but everyone needs a roof. (I have friends and relatives in both continents so I speak from real life experience not CNN or Fox news).
When people buy a house, a funny thing happens in that they try to buy the biggest house they can afford. How about just buying a house that they need and not having to work extra hours for the next 30 years?
Good point and reminder!
I agree debt is debt is debt. I am trying to escape it– one car down and one to go. However, I disagree that mortgage debt is the “best” debt. A home requires upkeep and numerous other ongoing expenses. My view of the “best” debt is education and training debt. It USUALLY translates into higher future income. In my book, income beats expense, any day of the week. Just don’t be a professional student . . .
You’re right that mortgage debt is the granddaddy of good debt. The problem has been the willingness of people to seek a larger debt than they can realistically afford to pay – for many, many years. In the UK the FSA are considering banning 100% mortgages and making a limit on income multiples to say 3.5x.
I’m thinking of opening a new business, but I know that I’m just risking debt. Hmmm….decisions decisions.
Thats true, but i guess you can view “good debt” as a helper to payoff for your mortgage. and not as something super great, like most people view it.