I think it’s ok to just say that some people are more debt averse than others, and some people are willing to take on more risk by going into debt.

I think that a lot of people really shouldn’t use debt – whether you call it “good debt” or “bad debt” just because they’re not good enough with their finances to be able to manage it well.

Others may be more on top of things, and be able to use/leverage debt to their advantage. As long as they understand the risks of going into debt, it’s fine by me.

For me and my family, we’re trying to live debt free for the most part, and I’m not willing to take the kind of risks some of you are talking about with debt. I prefer to pay things off, and save/invest -as opposed to leveraging someone else’s money.

Do you use electricity, water, and/or natural gas in your home/apartment? Guess what? You are using credit. Yes, credit. In a sense, you are in debt to the gas/water/electric companies. Why? They are providing a service and/or product to you before you pay for it…that is called credit (and in an abstract sense, you are indebted to the utilities.) How is this any different from any other form of debt/credit? You are getting something now with the promise to pay for it later. If you pay on time, then no fees are attached. Wow, that sounds a lot like a CREDIT CARD!

Everyone uses credit unless you are completely off the grid. I would say that this is the extreme exception.

Many people can’t pay the costs of college with a job while they are going to school. Some exceptional people manage it, but they are extremely few (about the same in number as the people who will lend you a significant amount of money at 0-1% interest).

Far be it from me to think one should be able to finish a college education by the time they are 30 (yes, if you have a full time job why you are in college, it may take that long to graduate). I guess I am Mr. Impatient ;-).

“When you take on debt of any form, any rate, whether good, bad, naughty, sexy or any other descriptive term, you are trading in your future selves labor for your present selves pleasure.”

So getting an education is “pleasure?” I thought you was preparing yourself for the future. Trading your future self to prepare yourself for the future sounds a bit better.

No previous poster said, “wake up.” However, leverage is how many people make there money. Did you know that Sam Walton started his first store with a $20,000 loan. It put him on the path to starting Wal-Mart. Without that loan who knows what would have happened, maybe it takes him another 10 years to get the money. By that time, maybe the idea is stolen by someone else or he doesn’t find it worth pursuing any more. For his finances (and all his heirs), I bet he’s pretty happy he took the $20,000 in debt. (That’s one example of a small business loan paying off, some do and some don’t)

In fantasyland, sure, laon me the money at 1%, and invest it risk free at 4%.

Back in reality, it isn’t realistic. In fact, your example is quite wrong. IF you could borrow one million dollars at 1%, you would be able to borrow that because there were no other investments available to the lender that were less risk with higher return. therefore to assume you could leverage that money and “make” 3% is foolish.

I know it is an example, but it is a crap example designed to support your position, which is flawed. No debt is good. The risk associated with leverage are too great for all but the most sophissticated of arbiters. The average person is not one of those.

As far as saving up for college, get your head out of the Gen X mentality. Pay for it as you go, with a JOB. That’s what real studs do, mr. impatient.

There is a very simple premise which debt “supporters” never mention. It is the association of risk and applying obligation on your future self.

When you take on debt of any form, any rate, whether good, bad, naughty, sexy or any other descriptive term, you are trading in your future selves labor for your present selves pleasure. You are also assuming risk. All debt assumes risk to varying degrees. Most people do not assess the risk correctly, and they loose. It is the reason debt is available in the first place…because most people loose.

As a previous poster said. Wake up. I used to think debt was great. That I was smarter than the system. Then we grow up, and realize having a simpl financial life is what is smart, and that means realizing no debt is good debt.

You’ll get it some day:)

If I tried to save up for college, I wouldn’t have been able to until I was 35. If I had to save up until I could buy a home in either Boston or San Francisco (the two places I have lived), I wouldn’t have been able to do it until I was 50. Meanwhile people who have bought homes 15-20 years ago have made hundreds of thousands in equity (even in today’s market).

Good debt is not something I’m willing to wait for. I won’t take on bad debt though without waiting.

From my perspective, there’s a lot of psychological detriments to having missed a great opportunity. It out-ways the psychological benefit of being debt free.

It requires no additional cash flow to, over the long term, create an additional portfolio of investments. What is interesting is over time your outstanding loan won’t change (assuming you only make interest payments) but your income stream and portfolio will grow.

Wise up!

As it is, Micah’s huge pile of student loans and car loan may be “good” debt but they’re also debt we’re trying to erase as quickly as we can to get through them. At least the car debt. And a large portion of the over $100k student loan debt. The latter is just not a monthly bill we want to be paying for the rest of our lives…paying it off will help us afford a mortgage better.