Is there such a thing as good debt?

[Ronnie41]

Good debt is how you can improve your own credit score, which is important when needing to borrow for a business.

[skinsfan]

I find it odd how many of you refer to the "masses" as if they are a group of broke idiots that you are obviously much better than. The truth is CONSUMER debt in America is a HUGE problem and DR helps the "masses" get out. I am not saying there is no such thing as good debt but get off of your high horses and understand that DR is not out to reach the uber rich he is out to help the little guy or the "masses."

[M16]

I find it odd how many of you refer to the "masses" as if they are a group of broke idiots that you are obviously much better than. The truth is CONSUMER debt in America is a HUGE problem and DR helps the "masses" get out. I am not saying there is no such thing as good debt but get off of your high horses and understand that DR is not out to reach the uber rich he is out to help the little guy or the "masses."

Thank you for the enlightenment. This thread is about business debt. DR doesn't believe in any debt business or personal. I agree with him on personal debt but he is a moron on business debt used to make money.

[TKK]

I'm a financial planner and have been for 37 years. I listen to him some. He is valuable IMO for folks who are not financially disciplined. There are several golden rules of finance and if anyone follows them they do not need a DR to tell them how to do it. It is common sense stuff

[jed1226]

I listened to DR sometimes. I think most people could learn some valuable lessons from him. But he is very much about making money. His average listener makes 94,000 and is not the broke debt burdened person.
I think he has found a way to help some people and make a lot of money along the way. More power to him. But that said, if everyone followed is advice this economy would be a 1/10th of the size it is. Consumer debt is a burden that will keep you poor but investment debt is a completely different animal. Of course there is risk, anything can happen and cause you to go under but the opposite is more likely if you have a good business plan and are a hard worker. I love real estate and own a lot of rentals, carry some notes and occasionally will flip a house. All of these are done with debt. But there are others that use debt in their area of specialty and make money their own way. I see it all as good, yes when you sign the guarantee it can cost you a lot if you fail but with risk comes reward.
Mainly be comfortable in what your doing. I would never borrow on margin in the market. The stress would kill me. But some men have made and lost millions doing it. To each their own. I just don't want to be the one bailing you out when it goes south. You take the risk you get the reward or the loss.



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[mjhaverkamp]

I'm a financial planner and have been for 37 years. I listen to him some. He is valuable IMO for folks who are not financially disciplined. There are several golden rules of finance and if anyone follows them they do not need a DR to tell them how to do it. It is common sense stuff

yep

[robbyreneeward]

Lots of good information in this thread guys. Thank you for so many replies


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[junkmanhunter]

I find it odd how many of you refer to the "masses" as if they are a group of broke idiots that you are obviously much better than. The truth is CONSUMER debt in America is a HUGE problem and DR helps the "masses" get out. I am not saying there is no such thing as good debt but get off of your high horses and understand that DR is not out to reach the uber rich he is out to help the little guy or the "masses."

I don't think any response to this thread insinuated anyone was on a high horse as you said. The OP question was about business debt. I think everyone that replied was or is a business owner or loaned money to businesses. Every person was stating why they felt some business debt wasn't bad and provided examples of why.

I think everyone agreed DR targets the undisciplined person who can't manage debt. Everyone seems to agree that his comments about business debt are silly. I agree too. How do you get started in business unless you're rich to begin with? You borrow money.

Yes I do think I am better than the broke idiot who I have to bail out. They are the ones who don't learn and won't learn how to manage consumer debt and continue to live above their means.

I started with nothing and figured out how to make a comfortable living and be able to save money. It included borrowing money for business debt.

Take it for what it's worth and thanks for your positive input into this thread.

[Mjjust]

I'm a commercial lender, a business owner, and a real estate investor so I can see this from all sides of the argument.






Dave Ramsey has people forgoing maxing out retirement accounts so that they can pay down their mortgage. That's insane. If you work for 40 years, you get 40 cracks at that tax advantaged space. Once a year passes and you don't take advantage, you never get that back. And for what? To save an after tax 3% or so in mortgage interest? Last time I check, the tax savings on retirement account contributions would be multiples of 3%.



A lot of people will run into a job loss or major life event during the time in which they are paying off their mortgage. In my opinion, if you are looking for the safest play, I rather have tons and tons of cash on hand than a mortgage that I've paid off half way or so when trouble hits. When you hit hard times, no one will care if your house is half way paid off. No bank will lend you money on a half paid off house if you have no job. If I was a Ramsey follower, I'd be sacking away cash hand over fist and on the day that that cash was more than my mortgage, then I'd decide if I wanted to pay it off or not, not before. If you want to be mortgage free, that's the safest route to get there.



Ramsey is a peddler to the masses who are drowning in consumer debt. I agree that consumer debt is awful but that's where Dave's good advice ends.

Not arguing with your other advice but you have your facts wrong on Dave Ramsey's advice as it pertains to investing and mortgage. He only says to forgo investing while you are paying off your consumer debt and only if you get real serious and do it quickly. Not 10-20 years. He has often said it won't work if you try to wander out of debt. Once your consumer debt is paid off then build a significant emergency fund of cash. He suggests 3-6 months of expenses. Then invest 15% in retirement and only after all that does he suggest paying down mortgage. He has never said to hold off investing till mortgage is done. Your right that would be insane but that Is not what he says or has ever said. It seems you have relied on what someone else told you about Dave because there is no way you could have believed that was his advice if you listened to more than an hour of his show. Either that or you are intentionally misrepresenting him. I don't believe you are. The problem now with your advice since I know some of it is absolutely not factual how do I know if any of the rest is good factual advice. It may be spot on but now I wonder.

There are several other posts that misrepresent( intentional or not) what Dave says and that makes me question their advice. His advice works for consumer and business. Can you make money faster and maybe more if you use debt? Sure you can. It's all up to you and your spouse if the risk is worth it. There is always some risk with debt. For many it is well worth it. That doesn't make his advice wrong. Will most business be successful with using debt? Probably but many will fail also. With catastrophic consequences when debt is involved. With Dave's advice even if you fail it won't ruin you. Just get to the finish line slower. Remember the tortoise and the hare.

[froghunter]

^^^This

I own the home I live in, have mortgages on all my rentals. That debt is paying itself off with almost zero effort on my end, and I will retire a millionaire.

Yep.

[Mike Javi Cooper]

Look at it this way... borrowing money that you do not have to borrow and using it to turn a profit is a good thing... borrowing money to pay bills because you borrowed money is a bad thing...


Oh... and paying off a manageable mortgage with a good rate instead of accumulating cash with a good rate of return... is irresponsible at the least..