Is Debt a Fact of Life?

Debt Money TrapQuestion: Is debt a fact of life?

Should we accept debt as a necessary evil of living in the 21st Century?

I’m not arguing in favor of debt, but raise the question since debt is such an integral component in today’s economy.

Consumption is funded by debt.

Government spending is funded by debt.

Cash is not king in the land of the plastic master.

Nearly everybody would argue for as little debt as possible. There isn’t much good about debt.

But what about some debt?

What about the use of debt in producing profits that exceed the interest, particularly in business?

What about the use of low-interest debt to fund higher-interest investments?

These are real-life questions.

It’s easy to talk theoretically about going “all cash” or spurning all debt. But as I go about my day-to-day life, it seems a bit unrealistic.

Not that I plan to hold onto my current debts. I still intend to pay them off as quickly as possible.

But once they are paid off, I can’t see myself getting rid of credit cards entirely. And from a business and investment perspective, I can’t see myself not using debt if it can be used to gain a financial advantage.

How about you? What are your thoughts?

[Here’s a related post I wrote in October 2007: Is There Such a Thing as Good Debt?]

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One thought on “Is Debt a Fact of Life?”

  1. Good points.

    Though, of course, debt has been around a lot longer than the 21st century. At least nowadays you won’t end up having a pound of flesh cut out if you can’t repay your debts in time.

    Borrowing money to make something happen now, can be a good thing. We sort of think of interest as an “evil” thing. But instead, it’s just a way of repaying the lender for their timely services.

    It really comes down to, for me, what and why you are borrowing money. If it’s because you want a “toy” now, instead of when you earned it, that doesn’t make much sense to me. If it’s because your kid is going to die from lack of medical treatment, well, that starts to seem like a logical decision.

    Many businesses could never even get off the ground without a loan. I worked in a restaurent that had quite the upstart. What we the owner supposed to do? Work at a minimum wage job for 40 years so he would finally have enough money saved to start a restaurant?

    Irresponsible Debt is really the culprit ruining the economy… not wisely investing loaned sums with the full intention of paying it back ASAP.

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