Quote:
Originally Posted by MarchHare
Keeping in mind that I voted "Yes" and absolutely consider my mortgage to be debt, it seems like some people in this thread are treating all debt equally.
Consider the following example: who of the following has a worse financial situation (assume they have the same income):
1) John has no consumer debt but owns a home valued at $300k with $200k worth of principle remaining on his mortgage
or
2) Mary has no mortgage debt (she lives in a rented apartment) but owes $100k in various consumer debt (credit cards, car payments, etc.)
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I think we all know that there are different types of debt. What people are confusing is the income statement of their personal finances, and the balance sheet of their personal finances.
Consumer debt, I think we can all assume, is bad. Why? Because your cash flow is negative.
Mortgage? Fine. Usually because its budgeted within your cash flow. Its also a inflation-proof investment (Its a minor investment - not the safest, not the best return, not the most liquid, but it has its places)
Car payments? I don't see how its bad either. At a low financing, I'd take a car loan every time and use the money I would have otherwise paid (for the car in cash), invested it in an entire index, and gotten positive return.
Education? Fine. Returns come in (hopefully) higher salary for a career.
Hell, business debts? How about acquisitions, where company A pays for company B in cash and takes out a debt for half of it?
All of them are debts. As Old Dutch said above, there are "good debt (smiles and nods)" and "bad debt (frowns and shakes head)" ... either way, they are debts.