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Yeah I completely disagree with this sentiment that debt = bad. You should use debt where it acts as an investment (in the true sense of the word investment, ra

Yeah I completely disagree with this sentiment that debt = bad. You should use debt where it acts as an investment (in the true sense of the word investment, rather than speculation). If you need to take on debt to buy that car that saves you an hour walk to work every day then that is good debt. Is it a good idea to use debt to purchase a house? If we believe in free markets then ownership should have roughly the same cost as renting. But ownership allows you to have more certainty that you won't get evicted x years down the line and that may be a worthy thing to invest in.

globular-toast 6y ago
It's only a good debt if you have something useful to do with that hour you save. If it's just to spend more time watching TV then walking to work is the better investment by far.
theandrewbailey 6y ago
Debt is risk. What happens when you lose all your income (as millions are right now)? Payments can't get made, and repossessions happen. If losing a job doesn't sound like a disaster to you, you've probably never experienced it, and/or you have the privilege of having a career in an in-demand field.
- barbegal 6y ago
  And that's why there are products to insure you against this risk called payment protection insurance (PPI). It's a shame that in the UK, PPI is now synonymous with mis-selling. The true cost of debt should be the interest rate and the costs to insure the debt (buildings insurance, landlords insurance, car insurance, PPI...)
  - TeMPOraL 6y ago
    How are they working out right now? It's one thing for an insurer to have a steady but small stream of policy payouts; it's another when half of your customers suddenly need a bailout at the same time.
    - Tomte 6y ago
      Insurance companies buy re-insurance themselves
- nradov 6y ago
  Repossession is a slow process. As a practical matter a homeowner who loses their job is in a better short-term position than a renter (all else being equal) because eviction for non-payment of rent is much faster than foreclosure.
- gouggoug 6y ago
  But debt buys you a house when you're done repaying it. If you are renting and you loose your income, the exact same thing happens to you, you can't pay and you might end up without a roof above your head. I would rather be in debt and have a small chance of owning a house, than pay rent for 30 years knowing I will absolutely never own that house.
- drfuchs 6y ago
  Even if your house gets foreclosed on, they don't confiscate it; you still own whatever equity you have in it, so you get a check when it's sold. Yes, you don't build equity quickly at the start, but still it's better than the rental situation in this regard.

globular-toast 6y ago

It's only a good debt if you have something useful to do with that hour you save. If it's just to spend more time watching TV then walking to work is the better investment by far.

theandrewbailey 6y ago

Debt is risk. What happens when you lose all your income (as millions are right now)? Payments can't get made, and repossessions happen. If losing a job doesn't sound like a disaster to you, you've probably never experienced it, and/or you have the privilege of having a career in an in-demand field.

barbegal 6y ago
And that's why there are products to insure you against this risk called payment protection insurance (PPI). It's a shame that in the UK, PPI is now synonymous with mis-selling. The true cost of debt should be the interest rate and the costs to insure the debt (buildings insurance, landlords insurance, car insurance, PPI...)
- TeMPOraL 6y ago
  How are they working out right now? It's one thing for an insurer to have a steady but small stream of policy payouts; it's another when half of your customers suddenly need a bailout at the same time.
  - Tomte 6y ago
    Insurance companies buy re-insurance themselves
nradov 6y ago
Repossession is a slow process. As a practical matter a homeowner who loses their job is in a better short-term position than a renter (all else being equal) because eviction for non-payment of rent is much faster than foreclosure.
gouggoug 6y ago
But debt buys you a house when you're done repaying it. If you are renting and you loose your income, the exact same thing happens to you, you can't pay and you might end up without a roof above your head. I would rather be in debt and have a small chance of owning a house, than pay rent for 30 years knowing I will absolutely never own that house.
drfuchs 6y ago
Even if your house gets foreclosed on, they don't confiscate it; you still own whatever equity you have in it, so you get a check when it's sold. Yes, you don't build equity quickly at the start, but still it's better than the rental situation in this regard.