Quote:
Originally Posted by MoneyGuy
Usually, but not always. We paid off our mortgage 18 years ago and years later borrowed it back to invest. It's tax deductible and we generally do much better than the interest rate, particularly the after-tax rate.
There is good and bad debt. Debt to buy a house and to grow a business generally are examples of good debt.
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I don't think there is good debt. There is bad debt and then less bad debt. I get that debt is utilized to grow a business or invest for the future. However, I am saying that having $100,000 capital readily available for these investments is better than paying someone to borrow for however long.
I understand that you can borrow at 4%, then invest at 9%. Some would say that is good debt, but now you have diminished your 9% return to 5%. Wouldn't it be better to not borrow and invest at 9%?
Of course the assumption here is that the capital is available, which it usually isn't. I just don't think there is good debt. To me, 'good debt' is like saying 'fun murder'. It just doesn't make sense in my head.