Do you consider your mortgage "debt"

[MoneyGuy]

Originally Posted by 8sPOT

At the end of the day, having zero debt beats having any debt at all.

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.

[Travis Munroe]

Originally Posted by THE SCUD

If you consider your house an asset, you must then consider the mortgage debt, irrefutably.

Thsi thread has also confirmed that I'll never buy anything from this realtor.

While it is an open forum I did not feel your comment was necessary to post. If you read the entire thread then you would understand that the thread is really about a mortgage being good debt or not.
Regardless, you are not forced to do business with me. I feel that the positive I bring to this forum far outweighs the odd post that may be taken the wrong way or of different opinion.
I work with people all the time whom have difference of opinions as I.
My strong belief is that someone with 50k in cc and car debt who is renting should not be considered in the same boat as someone with no cc or car debt but owns a home with 300k equity but still has 50k in mortgage debt.


Sorry you felt so strong to post such a remark.

[octothorp]

No such thing as good debt. There's such a thing as necessary debt, which should be based on a serious valuation of goals and the amount of risk you're willing to assume to reach those goals. It's a valuation that should include far more than a simple financial bottom line. For someone who values higher levels of education, student loans are going to be a necessary debt; for someone who values home ownership, a mortgage is likely going to be a necessary debt. I can't say one is a good debt and the other bad, any more than I can say one is a good set of values while the other is bad.
Consumer (credit card) debt is almost always unnecessary debt, because it is the simple accumulation of debt without contributing to satisfying any goals in one's life.

[worth]

I don't have a mortgage, but yes, I would definitely consider it debt.

[sketchyt]

Originally Posted by Realtor 1

After being roasted on my comment questioning a mortgage to be debt I am curious how everyone feels.

I think there's some who love any reason to take people like realtors down a notch.

All I know is if I didn't play the property ladder game prior to the recession I would not be living the lifestyle I do now. Although it's clearly a debt by definition, I would also consider getting a mortgage as one of the better financial decisions I've made (along with paying it off as quick as possible)... which I believe is the sort of thing you're trying to get at with your question.

[MoneyGuy]

Originally Posted by octothorp

No such thing as good debt

Bill Gates disagrees. Warren Buffett disagrees. Many, many people who have borrowed to buy, start or expand a business disagree. I know two people who borrowed to start electrical contracting businesses and are now wealthy; they disagree. I know a couple of land barons who disagree. I know someone who borrowed to buy apartment buildings and rental houses; he disagrees. I have a friend who borrowed to build commercials buildings and retired at 40; he disagrees. The people here who have built their net worth with debt would, I believe, disagree.

I'm not saying it's for everyone but business is built on debt. You may dislike debt but that doesn't make it wrong.

Smarts + money + hard work = success. If you don't have the money, you have to borrow it.

[bizaro86]

Originally Posted by octothorp

No such thing as good debt. There's such a thing as necessary debt, which should be based on a serious valuation of goals and the amount of risk you're willing to assume to reach those goals. It's a valuation that should include far more than a simple financial bottom line. For someone who values higher levels of education, student loans are going to be a necessary debt; for someone who values home ownership, a mortgage is likely going to be a necessary debt. I can't say one is a good debt and the other bad, any more than I can say one is a good set of values while the other is bad.
Consumer (credit card) debt is almost always unnecessary debt, because it is the simple accumulation of debt without contributing to satisfying any goals in one's life.

I really disagree with the bolded part. Any debt incurred to make an invested with an after tax, risk-adjusted return significantly higher than the cost of the debt is good debt, as it increases your net worth dramatically.

As someone said earlier in the thread, how much would you borrow at 6% if you had a guaranteed 10% place to invest the money. For me, the answer to that question would be, "As much as I could." I appreciate that different people have different levels of comfort with debt, but painting all debt as bad debt is overboard, imo.

[wookster]

Originally Posted by octothorp

No such thing as good debt. There's such a thing as necessary debt, which should be based on a serious valuation of goals and the amount of risk you're willing to assume to reach those goals. It's a valuation that should include far more than a simple financial bottom line. For someone who values higher levels of education, student loans are going to be a necessary debt; for someone who values home ownership, a mortgage is likely going to be a necessary debt. I can't say one is a good debt and the other bad, any more than I can say one is a good set of values while the other is bad.
Consumer (credit card) debt is almost always unnecessary debt, because it is the simple accumulation of debt without contributing to satisfying any goals in one's life.

I would describe "good debt" pretty much the same way you describe "necessary debt", but I have talked to a few different mortgage brokers about debt and it seems that the finance companies seem to distinguish between good and bad debt as well when deciding on whether they are going to give you that mortgage or not, and the interest rate it will be at. I know there are other factors involved as well, but there seems to be a difference to me.

So with what I've been told on the subject I would say that if you carry some debt it would be better to have "good debt" as opposed to "bad debt".

[THE SCUD]

Debt is good. The amount of financial illiteracy here is hilarious. A Mortgage is debt. It's classification is situation dependant, and can be anything from good debt to bad debt.

It's good debt if you're leveraging the value of your home into borrowed money for an investment

it's neutral debt if you're paying for your home

it's bad debt if you're borrowing against your home for those sweet new shades you want (HELOC)

Threads like this make me feel pretty confident that I will be employed and busy for the rest of my life.

[Flamenspiel]

Hm, I'll go by what my accountant says, there are two kinds of debt: "debt and tax deductible debt".

[East Coast Flame]

Originally Posted by THE SCUD

The amount of financial illertacy here is hilarious..

Nailed it

[goaliegirl]

I don't, I have quite a bit of equity in my home right now, and if I sold it I would have a pretty good chunk of change. If House prices dropped substantially then maybe I would class it as debt, but as it is right now not so much.

[Phanuthier]

Originally Posted by Realtor 1

While it is an open forum I did not feel your comment was necessary to post. If you read the entire thread then you would understand that the thread is really about a mortgage being good debt or not.
Regardless, you are not forced to do business with me. I feel that the positive I bring to this forum far outweighs the odd post that may be taken the wrong way or of different opinion.
I work with people all the time whom have difference of opinions as I.
My strong belief is that someone with 50k in cc and car debt who is renting should not be considered in the same boat as someone with no cc or car debt but owns a home with 300k equity but still has 50k in mortgage debt.


Sorry you felt so strong to post such a remark.

Why do you keep referring to car debt as bad debt? If you were a car salesman instead of a house salesman, would your opinion differ?

And you kind of dodged the remark as to why you implied student loans are a bad debt as well.

I don't see either of those 2 debt's as necessarily a bad thing to have.

[Phanuthier]

Originally Posted by sketchyt

I think there's some who love any reason to take people like realtors down a notch.

All I know is if I didn't play the property ladder game prior to the recession I would not be living the lifestyle I do now. Although it's clearly a debt by definition, I would also consider getting a mortgage as one of the better financial decisions I've made (along with paying it off as quick as possible)... which I believe is the sort of thing you're trying to get at with your question.

I don't hate realtors, my parents did a lot of real estate (I helped out a lot, I "get" the real estate thing) and I know/knew a lot of realtors. I have nothing against them.

I just happen to think that a realtor here, trying to sell the idea that mortgage isn't a debt, is a little bit conflict-of-interest. If he would have said "a mortgage is a debt, but its a useful tool that is meaningful and/or a useful tool to people who are financially stable" then hey, I get it. I know the game. But trying to sell the idea of how great a mortgage is, then look down their nose at student loans, car loans, etc brings bad juju.

[octothorp]

Originally Posted by MoneyGuy

Bill Gates disagrees. Warren Buffett disagrees. Many, many people who have borrowed to buy, start or expand a business disagree. I know two people who borrowed to start electrical contracting businesses and are now wealthy; they disagree. I know a couple of land barons who disagree. I know someone who borrowed to buy apartment buildings and rental houses; he disagrees. I have a friend who borrowed to build commercials buildings and retired at 40; he disagrees. The people here who have built their net worth with debt would, I believe, disagree.

I'm not saying it's for everyone but business is built on debt. You may dislike debt but that doesn't make it wrong.

Smarts + money + hard work = success. If you don't have the money, you have to borrow it.

Originally Posted by bizaro86

I really disagree with the bolded part. Any debt incurred to make an invested with an after tax, risk-adjusted return significantly higher than the cost of the debt is good debt, as it increases your net worth dramatically.

As someone said earlier in the thread, how much would you borrow at 6% if you had a guaranteed 10% place to invest the money. For me, the answer to that question would be, "As much as I could." I appreciate that different people have different levels of comfort with debt, but painting all debt as bad debt is overboard, imo.

Both you guys missed my point so I'll try to restate it a different way. I think you both assumed that because I said that debt can't be good, it must be bad.
I actually feel you can't have good debt or bad debt, because debt is just a tool to accomplish certain goals; it's inherently neutral, and the only measurement of it is whether it helps us achieve the most important goals in our life. Unless you are pre-christmas Scrooge, it's very likely that money, in and of itself, isn't the end goal in your life either; but money is a very powerful tool in helping you achieve your goals. As such, money is inherently neither good or bad. Labelling some debt as good and other debt as bad tends to prioritize the long-term financial picture above all else, and overlooks the reality that our goals are much more complex than that. I prefer to turn that the other way round: start with the end goals you want to achieve in life, then determine the necessary financial decisions to get there.

And yes, all of this applies to business debt too: we start with our goals, then work backwards to determine the necessary tools. And yup, a lot of the time it's debt. Labelling it as good or bad debt is counterproductive. It's necessary.

[SeeGeeWhy]

Originally Posted by THE SCUD

Threads like this make me feel pretty confident that I will be employed and busy for the rest of my life.

Threads like this make me feel pretty confident that many people will be required to be busy and employed for the rest of their lives, too!

[8sPOT]

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.

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.

[return to the red]

Hmm, personally I look at it as an investment but that is totally dependent, in my opinion, on how much equity you have built into the house and the amount mortgaged.

[squiggs96]

Originally Posted by Realtor 1

While it is an open forum I did not feel your comment was necessary to post. If you read the entire thread then you would understand that the thread is really about a mortgage being good debt or not.
Regardless, you are not forced to do business with me. I feel that the positive I bring to this forum far outweighs the odd post that may be taken the wrong way or of different opinion.
I work with people all the time whom have difference of opinions as I.
My strong belief is that someone with 50k in cc and car debt who is renting should not be considered in the same boat as someone with no cc or car debt but owns a home with 300k equity but still has 50k in mortgage debt.

This thread is not about mortgage being good debt or not. It is about whether it is debt or not. However you want to classify it, debt is still debt.

[return to the red]

Just thought of something. If you have rental properties but carry a mortgage on those properties would you concider them debt still or an investment?