Did Jack Spirko just acknowledge there is such a thing as good debt? Yes I did and I always have. It ain’t consumer debt though and it ain’t student loan debt.
Today I have to admit something though, in my early days I was totally anti credit card, and adamant that there was no justification for using one. My opinion on that hasn’t changed, I still think it is true in 2008, but it also is no longer 2008, much has changed, so my opinion in 2015 is different. Today I need to do this long over due episode.
Now the WARNING LABEL – Debt is like a gun, a tool, it can be used for good purposes and bad. You can hurt others and/or yourself with it. Every situation is different, I don’t think anyone should take on any debt without careful consideration. I consider some debt bad but at times necessary and some debts to be evil and never to be entered into. Call it muzzle discipline with debt!
Join Me Today As I Discuss…
- What has changed that has caused me to change my opinion
- Rental car policies
- Mortgage policies
- Auto loan policies
- Land financing policies
- Overall bank underwriting
- It will likely only get worse from here
- The rules before assuming a debt
- Can I service the debt
- What other opportunities does servicing the debt cost me
- Is there any other option, is it better if it exists
- What is my exit strategy if I can’t pay
- Debt is good when
- It pays for real property that is a good investment
- It makes you money, it is profitable
- It pays for an asset that increases in value
- The underlying liquid asset value exceeds the loan value
- There are any additional options for discharge that mitigate your damage
- The debt increases the value of an existing asset by more than the loan value
- Most importantly you know what the F you are doing
- Debt is bad when
- It pays for a commodity that decreases in value but does hold value
- It is difficult but not impossible to service
- It buys things you don’t really need but instead simply want
- Discharging it is difficult and comes with serious damage to your life
- Debt is evil when
- Any loss of income will render servicing it impossible
- It is impossible to discharge (student loans)
- The underlying commodity rapidly sheds value, becomes worthless
- You don’t know what the F you are doing and/or why you are doing it
- Building credit today
- Buy something with good to not so bad debt
- Use bad debt to pay for the better debt
- Essentially pay for everything with “cash” using the debt only as a funnel
- Pay for stuff you’d have to buy anyway, insure payment with automation
- This is not a permission slip to get into debt, your your effing brain folks!
Resources for today’s show…
- Join the Members Brigade
- The Year 1522
- Join Our Forum
- Walking To Freedom
- TSP Gear
- Harvest Eating – (sponsor of the day)
- Western Botanicals – (sponsor of the day)
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