The distinction between good debt and evil debt

By golfplan18   Follow   Tue, 8 Jan 2013, 7:26am   457 views   4 comments
In Irvine CA 92620   Watch (0)   Share   Quote   Permalink   Like (1)   Dislike

I make no secret of my disdain for the behavior of bankers during the housing bubble. I’m not so extreme that I consider all borrowing and lending to be evil; however, I draw a clear distinction between what I consider good debt, useful for economic efficiency, and bad debt, useless and unproductive that results in misallocations of capital and human suffering. Surprisingly enough, the line separating the two is clear and easy to calculate and quantify.

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  1. Oil Can

    21 threads
    Oil Can's website

    1   7:33am Tue 8 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    My grandparents were old school and believed ALL debt was bad. But that is the view forged by the Depression...the first one.

  2. zzyzzx

    Befriend (10)
    882 threads
    Baltimore, MD

    2   7:42am Tue 8 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    I also think that there is no such thing as good debt. Calling something a good debt is really just someones justification for going into debt.

  3. everything

    Befriend (2)
    3 threads

    3   8:03am Tue 8 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Neat, an article i don't need to read since I don't do debt, some creditor gave me my .. what is it?, credit score the other day, I'm a 808, whatever that means.

  4. fedwatcher

    Valencia, CA

    4   10:53pm Sat 12 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    There is a case for "good debt". "Good Debt" is used to purchase an asset that creates income greater than the servicing costs of the debt. "Bad Debt" does not. What many fail to recognize is that the house you live in is a consumable liability.

    Many do not like the posts from the successfull real estate investor in Scottsdale, AZ. However, he has taken on "Good Debt". You cannot do the same in much of California.

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