Is there a good debt?

When it comes to financial matters, you have either a liability or an asset. In recent decades, people have become experts or “experts” when they know how to leverage debt. Now, it is even more important to understand the rules of interaction with money. So, with that said, is there good debt?

Good debt is an oxymoron like giant, profitable shrimp or efficient government. There are many euphemisms for debt like leverage, credit, marginal accounts, etc. The bottom line is that if you owe money to someone or something, then it is a debt.

The borrower is the slave of the lender.

This concept should be taught and practiced in schools and businesses. Having some debt can go well when business (for example, real estate) is doing well. When business is bad (for example, real estate), debt will be a burden that can hinder or even eliminate your business. It’s hard to get that debt mentality out of our heads. For example, it is generally accepted that you have to go into debt (for example, student loans) to go to college, buy a car, and even buy food. We have this mentality of having it now and paying for it later. I remember when sections were the closest thing to credit. For those who don’t know or don’t remember, a retirement plan is when someone puts a down payment on an item (eg clothing) and then makes regular payments until it is canceled. Then, and only then, do they take possession of the merchandise.

How about a house? Don’t we need a credit or a loan to buy one? That would probably be the best exception with a few conditions:

* fixed interest rate
* manual underwriting (if the lender is too picky about credit scores)
* no other debt
* 15-year mortgage
* Payments do not exceed 20% of your salary.

Those are general conditions, but they have worked for many people, especially in these tough economic times. Naturally, I have learned from past experiences with investment properties. It is better not to have a mortgage (by the way, the mortgage derives from a French word that means “until death”).

Therefore, it is safe to say that there is no such thing as good debt. It will help you prosper in difficult times. It will help you prosper more in great economic times. Debt is a four letter word to avoid.