“Good Debt” Doesn’t Exist

There are no guarantees with debt

Oh, hi. I’m assuming 90% of you are here because you saw the title of this blog, had a mini fit, thought about how stupid the writer must be, and well, now you’re here shaking your head and fuming even further. When I say “good debt” doesn’t exist, most people fire back with the usual responses like:

  • My student loans ended up tripling my income.

  • My mortgage provides me with a roof over my head

  • Investments, my business, my blah blah blah blah and one more blah for “good” measure.

These are all great things. I mean, do I have anything against people who take out student loans for a career that will help them become financially successful? No. In fact, I did the same.

Do I have anything against people who take out a mortgage on a home that they needed, wanted, and could afford? No. I’m actually pretty jealous.

But do I have a problem with you (yeah, all of you) who say that some types of debt are good? Yup.

Why? Because of the following sentence I once heard someone (AKA Preet Banerjee) say:

Calling it bad debt and good debt is like calling it good sh*t or bad sh*t. At the end of the day, it’s all still sh*t.

When I tossed the question out to my internet friends, asking what “good debt” was, most of their responses were what I mentioned above.

@MixedUpMoney three words, real estate baby!

— StockTrades (@StockTrades_CA) November 16, 2016

@MixedUpMoney A student loan of $30k that increases income $30k a year is fantastic debt.

— Nelson! (@financialuproar) November 16, 2016

@MixedUpMoney the bill that comes after dinner at a great restaurant! #GoodDebt

— Ty (@GetRichQuickish) November 17, 2016

In my personal (and charming) opinion, one of the worst ones anyone will ever tell you is “the best one” is a mortgage.

I mean yes, I’m happy for you and your home. But what makes us think we can just call that good debt? Is it the BEST POSSIBLE investment you can make? No. Absolutely not. But is it an investment none the less? Yes.

A house is the one I could argue the most. I mean, if we’re going to call anything “good debt” here (which we’re not), it’s the investment that increased your net worth by a lot more than this:

“Over 30 years, stocks made 8.5 per cent and houses 5.5 per cent.”

So maybe "good debt" isn’t a thing at all. Maybe instead we should call these “good debts” investments, or better yet, side effects of bad and good investments. Because just tossing an adjective in front of the word debt is pretty easy to do.

Exhibit A

Happy Debt: The type of debt where it’s still debt but it made you happy for a split second in time.

LOOK AT ME, I coined a term.

Maybe the idea was invented by some insanely brilliant marketing agency who was trying to sell the first piece of property ever.

"You know what would go great with that cave, sir? A ridiculously high mortgage."

Wait a minute… who did invent the term “good debt”? I mean, where did it come from?

I seriously looked/researched/crawled into the deepest darkest corners of the internet and found nothing.

Because obviously no one would want to admit that they invented the term for a sales tactic.

THE HORROR.

So let me just do as they do to us millennials, and reverse-back blame the boomers. Hey guys, thanks a lot. Just kidding - but it does feel good to blame someone. It's all starting to make sense now.

All in all, I get it. You want a reason to justify your high-expense costs, your money mistakes, your successes that caused you struggle, your everything’s ever. But can we please start just calling it what it is?

*stares at you and mouths the answer*

It’s debt.

And putting the word “good” in front of debt shouldn’t make people feel more comfortable to hold onto it. Because in 2016, we take everything literally. And if I say a mortgage is good debt, people will take ownership of that debt like it’s more of their baby than well, their actual baby.

Most people take on debt because they want to increase their standard of living. And guess what? There are no guarantees with debt (other than the guarantee that you have to pay it back).

There is no guarantee that you’re going to invest money into a home, degree, or business, and then come out on the other side to a “YOU’RE RICH! WELCOME HOME” sign and fireworks in the shape of dollar bills. Man, my imagination is on point today.

So now how much do you want to write a comment hating on everything I’ve said above, OR how badly do you want to scream “YASSSS QUEEN”? The floor is yours.