Good Debt vs Bad Debt…ever heard of it?
Sure, if you’re like me then you probably learned the now sacred cow “good debt vs bad debt” philosophy in Rich Dad, Poor Dad at some point. And it seems to make good sense, doesn’t it? Good debt vs bad debt 101 tells us…
- Bad debt is debt accrued on “stuff”, like toys, vacations, fancy cars, etc.
- Good debt is leveraged debt that you use to make you money. Like when you borrow from a lender to purchase houses that earn you positive cash flow.
In fact I’d say “Good Debt vs Bad Debt” tends to be a cornerstone philosophy for more investors than not today. However…
Good Debt vs Bad Debt: What if We’ve Got it All Wrong?
Could it be that “good debt” we’ve grown to appreciate and pursue, is really just more bad debt in disguise?
Consider this: These are certainly trying times for many, and we’ve probably all heard of big, successful investors who found themselves belly up in the last couple of years, right?
Right now I’m thinking of two of the biggest investors in my neck of the woods once upon a time — guys I used to wholesale a large number of my deals to — who aren’t even in the game anymore. And this can be found everywhere.
So what happened?
Now consider this: Have you ever heard of a debt free investor going out of business?
Me neither. Kinda makes you think, doesn’t it?
If like me, you’ve ever bought into the “good debt vs bad debt” myth (and yes, I do believe it’s a myth at this point) then I have a short, paradigm shifting video for you to chew on. And whether you agree with me or not, I guarantee you’ll find it thought provoking.
You’ll hear about three different folks who have wrestled with this very “good debt vs bad debt” issue. All of them are savvy, successful real estate investors who earn great money through lots of profitable deals…
- A well known, big name flipper with 4.5 million in “good debt” to contend with
- Another big investor with 1,100+ solid rentals in his portfolio (all “good debt”)
- And third who’s average yearly income hovers around half a million or so, who somehow can’t scrape by on less (thanks to “good debt”)
I submit to you that only one of them is really successful. The other two are slaves in denial of their slavery, but living steeped in it nonetheless. Whether they realize it or not, most every decision related to finances, time, life and personal freedom is, in fact, dictated by their “good debt”.
Are You an Unwitting Slave to “Good Debt”?
Have you been drinking the good debt vs bad debt Kool-Aid? Leave your preconceptions at the door, and see what you honestly think… (and feel free to LOL when he tells the guy at 7:43, “Ya know, you’re nothing but a FAKE.” 🙂 )
Good Debt Vs Bad Debt Debunked
I hope the short video above challenged you like it did me. I no longer believe in “good debt vs bad debt“. It’s more like “bad debt vs worse debt vs no debt”.
What are your thoughts after watching the video above? Agree or disagree? I welcome your comments below.
PS – If the idea of debt free investing intrigues you, then I highly recommend you check out the Debt-Free Investing workshop with Shaun, Steve and Joe. Really good stuff, and very reasonably priced.