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In the context of living a debt-free existence, I have to disagree. In the monetary policy environment we live in, having debt is the most sensible way to buil

In the context of living a debt-free existence, I have to disagree. In the monetary policy environment we live in, having debt is the most sensible way to build wealth. Dollars are a terrible store of value. Dollars invested in a savings account are almost as bad. Securities, real estate, and inventory are much better. Dollars invested in education and advertising to multiply the value of securities, real estate and inventory are still way better than a savings account. In an environment where a savings account pays <1% and collateralized debt costs 1-8% and non-collaterlized debt costs 10-20%, the sensible thing is to borrow as much as you can and invest it wisely. In such an environment, I'd be proudest paying cap gains tax at 15% than income tax updwards of 25%.

brightball 10y ago
A lot of people get confused when talking about debt just because types of debt are different. Using debt to generate income = good. Using debt to buy stuff you can't afford = bad. The first pays itself back while the latter does not. When somebody like Dave Ramsey is talking about debt, he's talking about paying off credit card bills, car loans, student loans, mortgages - payments that you're making that leave you personally saddled. Increasing your cash flow by decreasing your expenses. When somebody like the Robert Kiyosaki (Rich Dad, Poor Dad) talks about debt he's talking about it in the context that you are: using debt to create an income generating asset, leveraging the tax advantage to increase cash flow and holding the asset as more valuable because held cash would simply result in devaluation through inflation. Increasing your cash flow by generating more cash flow. Headlines should really start trying to clarify Bad debt vs Good debt.
- ChuckMcM 10y ago
  I resonate strongly with this position but don't think the media will ever be able to express the nuance well. I explain to people about the difference between borrowing to buy a farm tractor that lets you double the money per acre you can get on your farm, vs borrowing to buy a super elite electric car that only drives you to the same places (and usually at the same speed) as your old gas car did. One debt increases your annual revenue for as long as you own it, the other increases your annual car expense as long as you own it (decreaing your revenue).
- vlunkr 10y ago
  As a regular Ramsey listener, I can tell you he is against ALL debt (except for a reasonable home loan). Basically if you are making some kind of investment, you should save up the cash for it.
  - alanfalcon 10y ago
    You're 100% correct—but also 90% of the people in his audience are squarely in the bad debt category and to them the simplified message of "debt is bad, get out of debt and stay out of debt" is winning andvice, especially with his straightforward plan.
    - brightball 10y ago
      Agreed
- ghostly_s 10y ago
  I think your being a bit generous. I listened to the entirety of Dave Ramsey's 'Financial Peace University' series and I don't remember him once mentioning the concept of "good debt". In fact, here it is, on his site: >Myth: Debt is a tool and should be used to help create prosperity. >Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe. http://www.daveramsey.com/blog/the-truth-about-debt http://www.daveramsey.com/blog/the-truth-about-debt
  - brightball 10y ago
    True. In the context of Kioski he talks about some debt almost entirely around real estate.
  - Spellman 10y ago
    Dave Ramsey is extremely anti-debt. With the exception of buying your house. But then only if you 20% down and 15-yr mortgage. And, let's face it, for the demographic he is targeting that's great advice. Most got into their situation due to poor handling of debt. However, the vast majority of other financial advisers in the world, and economists, agree that with good management debt can be very beneficial. Dave Ramsey is not the Financial God. He has a very simplified, easy-to-follow program designed for a specific set of individuals. And, honestly, the majority of people would do well to follow it to the letter. But that doesn't mean EVERYONE should for EVERY situation.
- compiler-guy 10y ago
  The term I have heard for this is "productive debt" vs "unproductive debt". Productive debt helps you make money. For someone starting out, that might be a modest car loan to get to work. Unproductive debt just helps you consume. Once your car is past the basic point-A to point-B automobile, a loan to but it is unproductive debt.
- jandrese 10y ago
  This is less black and white than you are making it out to be. Taken to the extreme you praise the millionare who is up to his eyeballs in debt and living under a bridge because all of his money is tied up in investments and he's going to die with the biggest fortune possible. Having tons of money is pointless if you don't eventually spend it on improving your life or the world around you. Obviously blowing all of your cash on frivolity is also bad, but you need to strike a balance or you will end up being Ebenezer Scrooge, a miserable old rich guy with nothing to show for his life but big numbers on a piece of paper somewhere.

brightball 10y ago

A lot of people get confused when talking about debt just because types of debt are different. Using debt to generate income = good. Using debt to buy stuff you can't afford = bad. The first pays itself back while the latter does not. When somebody like Dave Ramsey is talking about debt, he's talking about paying off credit card bills, car loans, student loans, mortgages - payments that you're making that leave you personally saddled. Increasing your cash flow by decreasing your expenses. When somebody like the Robert Kiyosaki (Rich Dad, Poor Dad) talks about debt he's talking about it in the context that you are: using debt to create an income generating asset, leveraging the tax advantage to increase cash flow and holding the asset as more valuable because held cash would simply result in devaluation through inflation. Increasing your cash flow by generating more cash flow. Headlines should really start trying to clarify Bad debt vs Good debt.

ChuckMcM 10y ago
I resonate strongly with this position but don't think the media will ever be able to express the nuance well. I explain to people about the difference between borrowing to buy a farm tractor that lets you double the money per acre you can get on your farm, vs borrowing to buy a super elite electric car that only drives you to the same places (and usually at the same speed) as your old gas car did. One debt increases your annual revenue for as long as you own it, the other increases your annual car expense as long as you own it (decreaing your revenue).
vlunkr 10y ago
As a regular Ramsey listener, I can tell you he is against ALL debt (except for a reasonable home loan). Basically if you are making some kind of investment, you should save up the cash for it.
- alanfalcon 10y ago
  You're 100% correct—but also 90% of the people in his audience are squarely in the bad debt category and to them the simplified message of "debt is bad, get out of debt and stay out of debt" is winning andvice, especially with his straightforward plan.
  - brightball 10y ago
    Agreed
ghostly_s 10y ago
I think your being a bit generous. I listened to the entirety of Dave Ramsey's 'Financial Peace University' series and I don't remember him once mentioning the concept of "good debt". In fact, here it is, on his site: >Myth: Debt is a tool and should be used to help create prosperity. >Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe. http://www.daveramsey.com/blog/the-truth-about-debt http://www.daveramsey.com/blog/the-truth-about-debt
- brightball 10y ago
  True. In the context of Kioski he talks about some debt almost entirely around real estate.
- Spellman 10y ago
  Dave Ramsey is extremely anti-debt. With the exception of buying your house. But then only if you 20% down and 15-yr mortgage. And, let's face it, for the demographic he is targeting that's great advice. Most got into their situation due to poor handling of debt. However, the vast majority of other financial advisers in the world, and economists, agree that with good management debt can be very beneficial. Dave Ramsey is not the Financial God. He has a very simplified, easy-to-follow program designed for a specific set of individuals. And, honestly, the majority of people would do well to follow it to the letter. But that doesn't mean EVERYONE should for EVERY situation.
compiler-guy 10y ago
The term I have heard for this is "productive debt" vs "unproductive debt". Productive debt helps you make money. For someone starting out, that might be a modest car loan to get to work. Unproductive debt just helps you consume. Once your car is past the basic point-A to point-B automobile, a loan to but it is unproductive debt.
jandrese 10y ago
This is less black and white than you are making it out to be. Taken to the extreme you praise the millionare who is up to his eyeballs in debt and living under a bridge because all of his money is tied up in investments and he's going to die with the biggest fortune possible. Having tons of money is pointless if you don't eventually spend it on improving your life or the world around you. Obviously blowing all of your cash on frivolity is also bad, but you need to strike a balance or you will end up being Ebenezer Scrooge, a miserable old rich guy with nothing to show for his life but big numbers on a piece of paper somewhere.