Can You Really Have Good Debt?

Personal finance

“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” – Ogden Nash

We’re always told that all debt is bad debt. We all know that debt sucks. Then there are the contrarians that talk about good debt. Is there really a difference between the types of debt that you can have? Let’s begin this discussion about the possibility of good debt.

Let’s look at some traditional forms of “good” debt:

  1. Education. An education is considered a good debt because you go to school to improve the rest of your life. You go to school to obtain an higher education so that you can make more money in the future and live a better lifestyle as you get older. You use student loans to pay for school because an education is too expensive and you need financial assistance.
  2. Home Mortgage. A home mortgage is considered good debt because it has always been seen as an investment and the logical thing to do in your 20s. With housing prices being so high, we need a home mortgage loan to pay for the astronomical cost of home-ownership.

You could argue that those are forms of positive debt for some us. In fact, you’ll often hear many people preach about you need to borrow money to obtain an education or to buy a home.

The problem is that we’re all not logical about debt. Not all of us are rational when it comes to good and personal finance.

Can you really have good debt? I don’t think so.

There’s the obvious argument here. You can use debt as leverage. You can use debt to further yourself or to improve your current situation. You can use debt to get quicker results.

The problem is that you don’t need debt. You don’t have to use student loans to pay for your education. There are other options. You can work full-time, wait it out, avoid college, or use funding offered by your college. You also don’t need to use loans for a home because you don’t have to buy a home in your 20s. Buying a home isn’t the next thing to do after you get your first job.

The truth is that you don’t need debt at all. There are other options for you. You don’t have to borrow money to get ahead. You can call it good debt if you want, but you don’t need any debt. Therefore, debt is unnecessary.

What do you guys think? Do you believe in good debt?

“Never spend your money before you have it.” – Thomas Jefferson


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2 Feedbacks on "Can You Really Have Good Debt?"


You don’t have to borrow money to get ahead, but it sure helps. Just like in your case, you got a 20k line of credit to get ahead :). You can say that people can just wait it out a little longer. But imo, life is not linear like that. The longer you wait, the more responsibility you have and the more you spend (ie family and healthcare costs). Also, life is plenty short. For most of us, we only have a good thirty or so years to make something of ourselves and accrue capital before we have to get to the conservation stage. Sure you can wait it out, but you might miss an oppurtunity of a lifetime to make your money, just like this current housing market. This adjustment in the housing market will probably not happen again for a long long time. If you wait, you simply won’t be able to find bargains like you can now.

While I agree that debt is not necessary—but it helps A LOT to springboard us into the upper echelon of the income limit if you do not have the resources readily available.

BTW, nice blog :). Found via the PF Carnival.


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