Zinger: Debt IS Good
Disclaimer: I am not a financial advisor, please consult your financial advisor or do your own research
before applying any of my monetary strategies to your own situation.
The simple reason is the dollar is losing value and debt is cheaper than it has ever been. What does that even mean?! With interest rates at an astronomically low rate, it is easier to go into debt with a loan at 2-3% and invest money elsewhere with a higher rate of return of 10%+. Ok, let’s do a math problem.
Breaking It Down
Cost Basis – $100,000
Let’s say Susie pays in full with cash
Cash in hand – $0
After 10 years that $100,000 is still only $100,000, it depends on what Susie bought.
OR Susie takes out a 10 year loan with a 3% rate
Invests $100,000
Average Rate of Return is 10%
After 10 years that $100,0000 is almost $260,000
Debt Goals
To make it abundantly clear, I am not saying I go get loans willy nilly. A good analogy — debt is like donuts. A couple sporadically are fine, even good for me (self care, y’all, if a donut is your happy place, don’t deprive yourself!). A lot of donuts will make me financially sick and unhealthy. So what are my goals? Making our money work in the best way possible for our family’s future. Am I comfortable with investing in an arena that will net me 10%+ ROI? Absolutely, note, this also means being comfortable with the level of risk that is associated with bigger returns.
Do you agree or disagree? Leave me a comment and we can discuss!
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