Debt and know more about it

Oh, hi. I’m assuming 90% of you are here because you saw the title of this blog, had a mini fit, thought about how stupid the writer must be, and well, now you’re here shaking your head and fuming even further.

When I say “good debt” doesn’t exist, most people fire back with the usual responses like:

  • My student loans ended up tripling my income.
  • My mortgage provides me with a roof over my head
  • Investments, my business, my blah blah blah blah and one more blah for “good” measure.

These are all great things. I mean, do I have anything against people who take out student loans for a career that will help them become financially successful?
No. In fact, I did the same.

Do I have anything against people who take out a mortgage on a home that they needed, wanted, and could afford?
No. I’m actually pretty jealous.

But do I have a problem with you (yeah, all of you) who say that some types of debt are good? Yup.

Why? Because of the following sentence I once heard someone (AKA Preet Banerjee) say:

Calling it bad debt and good debt is like calling it good sh*t or bad sh*t. At the end of the day, it’s all still sh*t.

When I tossed the question out to my internet friends, asking what “good debt” was, most of their responses were what I mentioned above.

In my personal (and charming) opinion, one of the worst ones anyone will ever tell you is “the best one” is a mortgage.

I mean yes, I’m happy for you and your home. But what makes us think we can just call that good debt?
Is it the BEST POSSIBLE investment you can make? No. Absolutely not. But is it an investment none the less? Yes.

A house is the one I could argue the most. I mean, if we’re going to call anything “good debt” here (which we’re not), it’s the investment that increased your net worth by a lot more than this:

“Over 30 years, stocks made 8.5 per cent and houses 5.5 per cent.”

So maybe “good debt” isn’t a thing at all. Maybe instead we should call these “good debts” investments, or better yet, side effects of bad and good investments.
Because just tossing an adjective in front of the word debt is pretty easy to do.

 

Exhibit A

Happy Debt: The type of debt where it’s still debt but it made you happy for a split second in time.

LOOK AT ME, I coined a term.

Maybe the idea was invented by some insanely brilliant marketing agency who was trying to sell the first piece of property ever.

“You know what would go great with that cave, sir? A ridiculously high mortgage.”