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Rant: My brother said 3 words that totally flipped my view on debt
I always thought all debt was bad, like a personal failure or something. Then my brother told me, "Debt is leverage." He's a real estate agent in Austin and he explained how he used a loan to buy a duplex that now pays for itself and then some. It made me rethink my whole "never borrow money" rule, but I'm still scared of messing it up. Has anyone else shifted from seeing debt as evil to just a tool?
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jason_lewis318d ago
The "debt is leverage" line sounds great until the market tanks and you're underwater on a property that's suddenly worth less than what you owe. Your brother's duplex works fine now, but one bad tenant or a housing crash and that leverage turns into a noose real quick. Plenty of people got burned in 2008 buying into that same philosophy, so maybe a healthy fear of debt isn't such a bad thing.
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margareto2618d ago
Oh I totally get that, @jason_lewis3. My own track record with debt is basically me buying a fixer-upper with a HELOC right before the market dipped, and I spent two years eating ramen while the value sat lower than what I owed. I swear my credit score still has PTSD from that whole ordeal. Your point about one bad tenant is spot on too, I had a renter who stopped paying and then told me the plumbing was her "personal art project." Debt is a tool, sure, but for folks like me it's more like a hammer I keep accidentally swinging at my own thumb.
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mark_carr717d ago
Idk, is it really that serious though? @margareto26's story about the fixer-upper and the art project plumbing is rough, but that's more about bad timing and a bad tenant than debt being evil. People act like one bad experience means the whole idea is trash, but plenty of folks use loans to buy a car or a house and it works out fine. Maybe the lesson is just to be picky about when you borrow and who you rent to, not to swear off debt forever.
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