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Level 2

Is all debt bad?

Don’t listen to this person. Saying you will always have debt is like saying you will always fail or be overweight or be a victim, etc. You can decide to be debt free & change your life. It’s not easy. Read again, it is NOT EASY. But like anything worth doing, if you chose to take it on & stick with it, it will be one of the best things you will ever do for yourself or your family. Check out Dave Ramsey & never borrow money again because you don’t need someone else’s money when you actually have money!
Level 2

Is all debt bad?

I am just an average schmuck and I really don’t have any education for business - I have been around a while so here goes. I believe a mortgage loan for a home is well within the good loan category. A home is one of the best investments still. I purchased my home on a half acre plot of ground for $125,000 15 years ago and now it appraises for $289,000. That seems to have been a great investment. I also believe you should never buy a brand new car on credit. The moment you drive off the lot it drops in value. Yet if you purchase a two year old car the investment seems to hold better. I also believe investing in an education is well worth putting at least some of the cost on credit for your degree is still money in the bank. Your income will be much higher with a degree than without. This will sound impossible but between my 1/2 tuition and my teaching assistantship my Masters degree cost me about $5,000 on credit. I felt blessed several times over when it came to retiring because my Masters degree greatly improved my retirement income making my $5,000 investment feel like nothing. There is my two bits.
Level 2

Is all debt bad?

Check out a guy named Dave Ramsey on podcast, YouTube, or his website. He's been a financial coach for a long time and has helped literally hundreds of thousands of people find financial peace. I've learned a lot from him personally and would definitely recommend getting his book "The total money makeover." Good luck sir!
Level 3

Is all debt bad?

 
Level 3

Is all debt bad?

Regarding is all debt bad, what is considered good debt other than homeowner ship.
Level 8

Is all debt bad?

In general, debt used to purchase income generating assets is good debt.  Debt used to purchase consumable items, or depreciating assets is bad debt.  For example, debt used to buy an investment rental property that generates a positive cash flow is good debt.   Debt used to buy a car, pay for groceries, or a vacation is bad debt.   

 

Debt used to pay for education leading to a better paying job, career advancement and a greater income is considered good debt.  Student loans for a degree in a field with no job opportunity or a very low paying job is probably bad debt.  What kind of job will pay a philosophy major enough to live on and also pay off the student loans?  The debt incurred to obtain a PhD is probably bad debt if you end up being a cab driver.

 

The debt used to purchase a primary residence is bad debt but necessary.  A primary residence does not generate any income, but the debt service is a liability until the property is paid off.  Now you may argue that the primary residence appreciates and you realize a profit (income) when you sell.  In principle, I agree, but appreciation is not guaranteed and usually slow when it happens.  If you hold the property long enough, you should realize some appreciation but consider that you are paying interest on your loan while the property is appreciating.  If you hold the property long enough you might break even.  For example, if the house you paid $100K for 30 years ago is now worth $250K you see this as a potential $150K profit when you sell.  However, consider that you paid a total of $250K in principal and interest for 30 years to retire your loan,  You just break even at best.  There are a few real estate markets where this is not the case, but for most real estate markets, home ownership iis more expensive than renting -- especially if you sell and move in every few years.

Level 6

Is all debt bad?

Taking out a mortgage is not a bad use of credit. However car loans are a huge waste of money. Car loans are a huge waste of money, live within your means. I made 32k a few years ago (not very much) I saved and saved and bought a 2k car. The following year I sold it for 1.9k and had planned for another car so I had already saved 2.5k. I was able to buy a 4k car. Needless to say my newest car I have ever owned was payed for with cash for a total of 8k. This following year I'm going to sale it an use my car fund of 6k to buy a 14k car. Get away from the red face child thing of wanting it now, now, now and save! Credit is than irrelevant if you use cash.
Level 6

Is all debt bad?

In general debt used in any form is bad. Buying a house, a car, credit cards, opening a business. It just never adds up. Do the math. A mortgage is going to cost way more than the house is worth. A car will depriciate. A credit card.... go ask a few millionaires if the have any. And then ask them how they became millionaires. I know you think you need that 7 dollar coffee in the morning but you don't. I know you think you need to buy new clothes for your kids for school but there are consingment sales with ralph Lauren stuff. I outfit my child whos 3 for 40 bucks a year. I set money into my 401k faithfully. I have saved an emergency fund for when things happen.im working on saving for a house in full. Averege income in America per person is 31000. Setting 10% aside for 401k leaves 27000. Minus bills and such( car payment is not a bill , you dont make one) you set up a budget and stick to it. You will save money. You just have to figure out whats an actually necessity and whats not. And yes i allow myself fun money. No debt is good. Im not by anymeans a bible thumper but one passage sticks out. THE BORROWER IS SLAVE TO THE LENDER.
Level 2

Is all debt bad?

If you ever plan to use credit you need to have credit available . 35% of tour credit score is driven by Payment History, so in order to further enhance your credit profile and increase your credit score you need to have a credit product (loan, personal loan, line of credit, mortgage, auto loan, credit card. Etc that generates a statement with a balance monthly that would require you to submit some payment . What is required in each individual part is to use credit responsibly so as to have it reported favorably on your behalf. 

Level 2

Is all debt bad?

35% of your credit score is driven by Payment History. So you need to have a payment reported to the credit bureaus on a monthly basis to show that you are capable of being on time with your payments . Getting a credit card is the easiest way to get and enhance your credit profile 

Level 2

Is all debt bad?

Debt is only bad if you cannot manage it. I have two credit cards and two bank loans under my belt and them alone put me at 710 credit. You just have to be smart as well as not put too much financial burden on yourself