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Regular Contributor
MM1234
Posts: 165
Registered: ‎03-18-2007
0

DEBT vs DEBT!!

I guess ALL debt is kinda related to credit of some sort so I hope its ok to post here.

I was wondering what you all think about GOOD DEBT vs BAD DEBT. I was reading some Suzy Orman articles and some Dave Ramsey Articles and read that Mortgages and School Loans for your kids are "GOOD DEBT" and Credit cards and Car payments "BAD DEBT".

Im almost CCard Debt free, No Car Payment and no other loans.....and was wondering when I buy a house am I no longer Debt free. I guess its ok to have debt for a house.

Just wondering....
Valued Contributor
Boswd
Posts: 1,065
Registered: ‎04-26-2007
0

Re: DEBT vs DEBT!!

All debt is bad  LOL
 
Any debt that can give you equity or a profit can be cosidered good debt
 
Student Loan ( equity in yourself)
Car loan
Mortgage 
 
 
Any debt that just eats away from you fiscally is bad debt
 
Credit cards
credit cards
store cards
charge cards
credit cards
did I mention credit cards.   ( though some will agrue that good credit card history is good for your credit score but overall it can drain the life right out of you financially, so overall it's bad debt)
Loans for no purpose but just to use to raise your credit scor.
Contributor
devhip
Posts: 210
Registered: ‎04-28-2007
0

Re: DEBT vs DEBT!!

Boswd, didn't you mention being a Dave Ramsey fan in another thread? If not, my mistake....must have been someone else. Dave would spank you for calling a car note "good debt." I think a good goal is 100% debt free but your mortgage in an ideal world. Unfortunately, most of us need reliable, safe cars and finance education, etc. I think Boswd is right though. I only keep my card accounts open for FICO purposes, under 10% util.
Valued Contributor
Boswd
Posts: 1,065
Registered: ‎04-26-2007
0

Re: DEBT vs DEBT!!

I am a Dave Ramsey fan but he does have some quirkey ways about him too.  He is spot on on how to get yourself out of Debt.   Somethings I don't agree with totally is that not having ANY credit cards, which I think everyone should have at least one just in case something comes up  and his take on cars.   He has some good points but  in most cases you need a car loan and having a car does give yourself an asset. 
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007
0

Re: DEBT vs DEBT!!

I would have to say car debt is about the worst! LOL
 
Nothing like investing as much as we do into a deapreciating asset.
Valued Contributor
Boswd
Posts: 1,065
Registered: ‎04-26-2007
0

Re: DEBT vs DEBT!!

yeah I guess your right,  it is an depreciating assest  
Ok  I'm changing auto loan from good debt to bad debt  :smileyvery-happy:
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
0

Re: DEBT vs DEBT!!

I've listened to Dave Ramsey on the radio. He makes good sense when he talks about becoming debt free but when he tells the Average Joe or Jane just to put their money in a mutual fund and leave it there he does them a grave disservice. Nothing goes up forever. Look at real estate. Rant off.
Valued Contributor
Boswd
Posts: 1,065
Registered: ‎04-26-2007
0

Re: DEBT vs DEBT!!

Yeah Like I said, when it comes to his getting debt free program, there is no one better in my opion, on some other topics,  eehhh,   I understand what he is saying and why, just don't totally agree with it.
Contributor
devhip
Posts: 210
Registered: ‎04-28-2007
0

Re: DEBT vs DEBT!!

I agree with Dave 100% in principal. Unfortunately, it's not my reality. I want to buy a house without getting jacked. Manual underwriting or not, if you don't have some good credit history it's doubtful you'll get prime. And as we all know....to have credit history you have to carry debt. Oh, the irony.
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
0

Re: DEBT vs DEBT!!

If you're driving 40 miles each way to and from work, and you're the sole bread winner, a car loan might well be good debt in that it is helping put food on your family's table.

 

If you're netting $5,200 a month, and you take a subprime home loan with a $2,800 PITI payment, there's a good chance it's gonna turn into bad debt.

 

Playing semantic games doesn't serve a lotta purpose. Everyone's situation is different.


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