Comments on: Good Debt, Bad Debt… Continued… http://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/ Where we prove that it is easier to save a dollar than to make a dollar! Fri, 18 May 2012 13:20:17 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Carnival Of Debt Reduction - Canadian Finance Bloghttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-1222 Carnival Of Debt Reduction - Canadian Finance Blog Mon, 08 Feb 2010 10:03:08 +0000 http://eliminatethemuda.com/?p=2348#comment-1222 [...] Eliminate The Muda! has an article called Good Debt Bad Debt… On Occasion. [...] [...] Eliminate The Muda! has an article called Good Debt Bad Debt… On Occasion. [...]

]]> By: Wednesday Trends in Credit Cards & Debt | Credit Karma Bloghttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-984 Wednesday Trends in Credit Cards & Debt | Credit Karma Blog Wed, 27 Jan 2010 18:25:01 +0000 http://eliminatethemuda.com/?p=2348#comment-984 [...] or truth: is there such a thing as good debt? Eliminate The Muda [...] [...] or truth: is there such a thing as good debt? Eliminate The Muda [...]

]]> By: The LeanLifeCoachhttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-897 The LeanLifeCoach Mon, 25 Jan 2010 02:00:42 +0000 http://eliminatethemuda.com/?p=2348#comment-897 @ Bytta - 8 times! ouch! I'm with you. When we bought our current house, we could "afford" over twice as much. My wife was ready to go all the way but I held back. As a result we will have our note paid off in 12 years at most and hopefully sooner. @ Bytta – 8 times! ouch!

I’m with you. When we bought our current house, we could “afford” over twice as much. My wife was ready to go all the way but I held back. As a result we will have our note paid off in 12 years at most and hopefully sooner.

]]> By: Bytta @151 Days Offhttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-895 Bytta @151 Days Off Mon, 25 Jan 2010 01:41:06 +0000 http://eliminatethemuda.com/?p=2348#comment-895 Ah, I understand where you're coming from. Most people who dole out those suggestions are: 1. Well-meaning older members of family who proved it was true because housing was dirt cheap during their time. 2. Real estate sales agents who pry on your money. Still, for me, getting into debt to buy a house is not inherently bad. It is when you OVER-LEVERAGE yourself, the drama happens. Ideally people should only borrow up to 3 times their annual income, but these days it is common to borrow more than 5 times their annual income; I have a friend who borrowed 8 times her annual income and I'm scared for her(gorgeous house, though :)). For our household, the initial mortgage is about 1.5 times our annual incomes and we're almost half-way through (my friend would never live in a house like mine). I guess it depends on how you play the game and what you are willing to sacrifice . .-= Bytta @151 Days Off´s last blog ..<a href="http://151daysoff.com/2010/01/24/day-11-designing-your-life-with-savings-snowball/" rel="nofollow">Day 11: Designing Your Life with Savings Snowball</a> =-. Ah, I understand where you’re coming from. Most people who dole out those suggestions are:
1. Well-meaning older members of family who proved it was true because housing was dirt cheap during their time.
2. Real estate sales agents who pry on your money.

Still, for me, getting into debt to buy a house is not inherently bad. It is when you OVER-LEVERAGE yourself, the drama happens. Ideally people should only borrow up to 3 times their annual income, but these days it is common to borrow more than 5 times their annual income; I have a friend who borrowed 8 times her annual income and I’m scared for her(gorgeous house, though :) ).
For our household, the initial mortgage is about 1.5 times our annual incomes and we’re almost half-way through (my friend would never live in a house like mine). I guess it depends on how you play the game and what you are willing to sacrifice .
.-= Bytta @151 Days Off´s last blog ..Day 11: Designing Your Life with Savings Snowball =-.

]]> By: The LeanLifeCoachhttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-881 The LeanLifeCoach Sun, 24 Jan 2010 12:47:03 +0000 http://eliminatethemuda.com/?p=2348#comment-881 @Ryan - <a href="http://www.kellydiels.com/" rel="nofollow">kellydiels</a> - I took a quick peek, thanks for the tip! @bytta - With respect, I disagree. You are right, of course but I disagree. There are lots of people with different opinions but most I have ever heard suggest buying a house "because it's the best investment you could ever make", "you get the tax write-off", "you won't be throwing your money away" etc. I'm not saying don't buy a house, but I am saying in the vast majority of cases debt sucks! The more I think about it the more I wonder if we should do like our grandparents did; save first and then buy. @Ryan – kellydiels – I took a quick peek, thanks for the tip!

@bytta – With respect, I disagree. You are right, of course but I disagree. There are lots of people with different opinions but most I have ever heard suggest buying a house “because it’s the best investment you could ever make”, “you get the tax write-off”, “you won’t be throwing your money away” etc. I’m not saying don’t buy a house, but I am saying in the vast majority of cases debt sucks! The more I think about it the more I wonder if we should do like our grandparents did; save first and then buy.

]]> By: Bytta @151 Days Offhttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-878 Bytta @151 Days Off Sun, 24 Jan 2010 11:19:48 +0000 http://eliminatethemuda.com/?p=2348#comment-878 $167,000 in interest over 30 years means an average of $5,567 per year. I suppose it's not a bad thing compared to the average rental cost over the years. You raised a valid point by saying that housing is not always a good debt because everyone is under the impression that the house price's increase will exceed the inflation and interest rate. But then again you're not supposed to buy your residential house for the sole purpose of making money. I agree with your point about student debt being a dud sometimes. It's scary how most young professionals will spend up to first 10 years of their working lives to pay off that debt. I'm blessed to have my parents paid the whole thing. Hopefully my kids will be as genius as Bill Gates, drop out of college and make billion of dollars :D .-= Bytta @151 Days Off´s last blog ..<a href="http://151daysoff.com/2010/01/24/day-11-designing-your-life-with-savings-snowball/" rel="nofollow">Day 11: Designing Your Life with Savings Snowball</a> =-. $167,000 in interest over 30 years means an average of $5,567 per year. I suppose it’s not a bad thing compared to the average rental cost over the years. You raised a valid point by saying that housing is not always a good debt because everyone is under the impression that the house price’s increase will exceed the inflation and interest rate. But then again you’re not supposed to buy your residential house for the sole purpose of making money.

I agree with your point about student debt being a dud sometimes. It’s scary how most young professionals will spend up to first 10 years of their working lives to pay off that debt. I’m blessed to have my parents paid the whole thing. Hopefully my kids will be as genius as Bill Gates, drop out of college and make billion of dollars :D
.-= Bytta @151 Days Off´s last blog ..Day 11: Designing Your Life with Savings Snowball =-.

]]> By: Ryan @ Planting Dollarshttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-871 Ryan @ Planting Dollars Sun, 24 Jan 2010 04:39:52 +0000 http://eliminatethemuda.com/?p=2348#comment-871 Ya gotta stop with the compliments Greg! If you wanna see good writing check out this girl's blog... Awesome writing ability! http://www.kellydiels.com/ As for your son just have him read my blog a lot and I'm sure he'll be fine ;) What does he say he wants to be when he grows up? .-= Ryan @ Planting Dollars´s last blog ..<a href="http://www.plantingdollars.com/interviews/an-interview-with-neal-from-wealth-pilgrim/" rel="nofollow">An Interview With Neal From Wealth Pilgrim</a> =-. Ya gotta stop with the compliments Greg! If you wanna see good writing check out this girl’s blog… Awesome writing ability! http://www.kellydiels.com/

As for your son just have him read my blog a lot and I’m sure he’ll be fine ;) What does he say he wants to be when he grows up?
.-= Ryan @ Planting Dollars´s last blog ..An Interview With Neal From Wealth Pilgrim =-.

]]> By: LeanLifeCoachhttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-869 LeanLifeCoach Sun, 24 Jan 2010 02:54:44 +0000 http://eliminatethemuda.com/?p=2348#comment-869 Ryan - As usual, you have a great command of the written word. "Debt Candidates" There are times that debt can be leveraged for gain but I can't help but wonder how often it really happens. I've been using some of MBAbriefs stock picking info to look at some public companies. It seems many just have a revolving door of debts. It makes you wonder how often manipulation of the numbers covers how inefficient debt can really be? .-= LeanLifeCoach´s last blog ..<a href="http://eliminatethemuda.com/2010/01/finance-marriage-to-share-or-not-to-share/" rel="nofollow">Finance & Marriage - To Share Or Not To Share?</a> =-. @Chris - Thanks for dropping by. You bring up a good point about debt. If someone else is paying for it, how bad can it be? With most businesses failing in 5 years it can't still be all good, but if your are going to have debt, getting someone else to pay for it is certainly the way to go! Ryan – As usual, you have a great command of the written word. “Debt Candidates” There are times that debt can be leveraged for gain but I can’t help but wonder how often it really happens.

I’ve been using some of MBAbriefs stock picking info to look at some public companies. It seems many just have a revolving door of debts. It makes you wonder how often manipulation of the numbers covers how inefficient debt can really be?
.-= LeanLifeCoach´s last blog ..Finance & Marriage – To Share Or Not To Share? =-.

@Chris – Thanks for dropping by. You bring up a good point about debt. If someone else is paying for it, how bad can it be? With most businesses failing in 5 years it can’t still be all good, but if your are going to have debt, getting someone else to pay for it is certainly the way to go!

]]> By: Chrishttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-868 Chris Sun, 24 Jan 2010 02:44:45 +0000 http://eliminatethemuda.com/?p=2348#comment-868 I am not an advocate for going into debt, and I intentionally left the subject of "Good Debt" out of my book "Defeating Debt." There is such a thing as good debt, but it is only when someone else pays it. Good debt is not taking on debt to purchase an asset you assume will appreciate. Good debt is taking on debt to make that will create immediate cash flow whether the asset appreciates or not. It is a sticky subject and one most people should just avoid all together. The reason I left the topic out of my book is because my book is written about personal finance and money management, not building wealth. Any personal debt is bad debt, but the wealthiest individuals throughout history have learned the difference between good debt and bad debt, and how to make good debt work for them. You make some great points though. .-= Chris´s last blog ..<a href="http://www.chriskidd.com/blog/would-i-read-book-tiger-woods-now" rel="nofollow">Would I Read a Book by Tiger Woods Now?</a> =-. I am not an advocate for going into debt, and I intentionally left the subject of “Good Debt” out of my book “Defeating Debt.” There is such a thing as good debt, but it is only when someone else pays it. Good debt is not taking on debt to purchase an asset you assume will appreciate. Good debt is taking on debt to make that will create immediate cash flow whether the asset appreciates or not. It is a sticky subject and one most people should just avoid all together. The reason I left the topic out of my book is because my book is written about personal finance and money management, not building wealth. Any personal debt is bad debt, but the wealthiest individuals throughout history have learned the difference between good debt and bad debt, and how to make good debt work for them. You make some great points though.
.-= Chris´s last blog ..Would I Read a Book by Tiger Woods Now? =-.

]]> By: Ryan @ Planting Dollarshttp://eliminatethemuda.com/2010/01/good-debt-bad-debt-continued/#comment-867 Ryan @ Planting Dollars Sun, 24 Jan 2010 01:37:24 +0000 http://eliminatethemuda.com/?p=2348#comment-867 From where I'm standing I only really consider businesses or real estate to be the only good debt candidates. Even then 100% financing doesn't really seem to fit good debt either... Student loans seem a bit off the mark considering over half of college grads end up doing something completely unrelated to their field of study anyways. It's more an investment in being socially normal for career grooming. Just my 2 cents. .-= Ryan @ Planting Dollars´s last blog ..<a href="http://www.plantingdollars.com/interviews/an-interview-with-neal-from-wealth-pilgrim/" rel="nofollow">An Interview With Neal From Wealth Pilgrim</a> =-. From where I’m standing I only really consider businesses or real estate to be the only good debt candidates. Even then 100% financing doesn’t really seem to fit good debt either…

Student loans seem a bit off the mark considering over half of college grads end up doing something completely unrelated to their field of study anyways. It’s more an investment in being socially normal for career grooming. Just my 2 cents.
.-= Ryan @ Planting Dollars´s last blog ..An Interview With Neal From Wealth Pilgrim =-.

]]>