Question 3

**dwallyfam** · 08-22-2006, 08:31 PM

Okay in Chapter 2 Dave talks about Myth vs Truth. One of the myths he talks about is

Debt is a tool and should be used to create prosperity.

What do you think about that statement?

Dave states the truth is

Debt adds considerable risk, most often doesn't bring prosperity, and isn't used by wealthy people nearly as much as we are led to believe.

What do you think about this statement?

Kellie

**Laurie in Bradenton** · 08-22-2006, 10:19 PM

The statement "Debt is a tool...." Makes me think of a saying my father often uses. "No one ever turns down and Andrew Jackson, George Washington, or which ever dead president happens to grace the bill in his hand.
Funny how you have to reach a certain age before you can admit, "Gee my folks are right!"

Laurie in Bradenton 45 and still learning that Yes, my folks do know it ALL!

**chisgran** · 08-23-2006, 08:31 AM

I think that is one of the ways that we all have gotten the wrong idea about debt. The debting industry lets us know that it is cool, savvy & smart to have debt. They let us know that we are the elite, we're in a special club. I remember getting some of my first gold cards, visa, mastercard. I even remember how I felt when I got my first & then my second Sears cards. I really felt like I had made it. I even remember the feeling of laying that card on the counter & telling the clerk, "Charge it!" I was really something back in those days. I would say that I was an idiot but I just bought into the dream just like everybody else. Not to mention, this is the way I was raised, on credit, juggling bills & living above your means. So why would I go this way? But guess what, I truly want something different for my kids & for my grandkids. So, it's on.

Oh, BTW, sorry I'm starting late with the group, for some reason I thought we were starting in Sept.

**tlenad** · 08-23-2006, 08:48 AM

As far as debt being a tool, it is a tool. One that if used wisely can benefit you greatly. Ie buying a house or getting an education, however many people including myself don't use it wisely. I can honestly say, that if I didn't take out my student loans I would never have been able to pay for school which enabled me to make much more money. And with the way housing prices are, it would take my entire life to save up the money for a house if I had to live on my own.

Yes debt brings a lot of risk. I do agree with that. It drives me crazy to think that once I get out of the debt I'm in, I'll jump right back into debt although for better reasons (buying a house) and that makes me nervous. The thought that if I loose my job I could loose my home is not something I like to consider.

As far as wealthy people using debt, I don't know how often they use it. And I don't particularly care, I'm not wealthy and I never will be.

**autumnlynn** · 08-23-2006, 08:56 AM

I agree that buying a home is good debt. I don't know anyone who has paid cash for their home except a doctor I worked for. However, it would be great to do it.

I consider bad debt, credit card debt, new vehicle debt, etc. The credit card companies make using their card seem so wonderful and romantic when in actuality all it does is make you a slave to them.

**Buckeye5** · 08-23-2006, 09:19 AM

I agree with tlenad and autumnlyn, however, I wouldn't call debt good but a necessity sometimes, like your house, or school loans(to some degree), the problem with school loans is that they can become bad debt, whenever they are being used for material things that have absolutely nothing to do with education. Let's face it many people abuse the student loan thing, and think that 3-4 years is far off, and they will be making great money after graduation and will have no problem paying it off. However, if you read and look around many people are struggling paying the abused student loans off. Also, society makes you think that you have to have debt. I wish I hadn't fallen into that brainwashing bull####, when I was starting out my new adult and married life. I guess the thing that I have learned is that cash does talk. Just ask a car salesman.

**emily_hope** · 08-23-2006, 12:24 PM

I hate debt with a passion. However, the only way we would have been able to ever have a house is by taking out a loan. Hopefully, this will turn out to be a good investment. I am praying that my DDs will get a scholarship for college. I know they will both be able to get some help with the Hope Grant. Any other debt like credit cards and cars loans, only benefit that company. If you can not pay it off when you recieve the bill, you accrue interest and it takes forever to get it paid off when you can only afford to pay the minimum payment. You end up paying so much more for an item you just 'had to have' because it was 'on sale' so you put it on your 'plastic' and planned to pay it off when you got the bill and lo and behold you weren't able to pay it off. Months down the road, you've paid double or triple what the item originally cost. Not such a bargain, huh?

**inneedofhope** · 08-23-2006, 04:29 PM

That reminds me of a young couple I know who are just getting married. Right out of college, with the debts to show for it, they get decent paying jobs, buy a house in an affluent neighborhood, already talking about using house equity to improve the property (how? it hasn't been long enough to build equity!!) I think they have been under the impression that the assessment value = market value, which is usually dead wrong! They've since purchased a rental property that they are hoping to sell in the future as well. I'm just concerned that they will start their marriage wading in debts, and only break even or worse in the end.
My hair dresser, who was raised on the poor side of town by immigrant parents who have made a name for themselves in this small community once said he father always tells her, "Don't tell me how hard you worked, or how much you spent, I wanna know how big is your bank account!"
I really liked that, though it may come off as bad work ethic, it hits the point that you can work your body to the ground, but what have you got to show for it??

**LastDragonfly** · 08-23-2006, 05:53 PM

I'm with everyone else on this issue. Debt is sometimes necessary, and I also think society plays on "human weakness" not to pay back debt. Debt may be a tool, but it is very dangerous.

**happymommy** · 08-23-2006, 08:15 PM

I wish I had listen to my elders also! If you don't have the cash you don't buy it. So simple...huh?

I now believe except for a mortgage (15% of take home) debt is a tragedy for us all. We are living proof of the damage debt creates. JMHO

**happymommy** · 08-23-2006, 08:16 PM

I wish I had listen to my elders also! If you don't have the cash you don't buy it. So simple...huh?

I now believe except for a mortgage (15% of take home) debt is a tragedy for us all. We are living proof of the damage debt creates.

**pammy** · 08-24-2006, 05:51 AM

I just remember reading The Millionaire Next Door. Most of them are first generation wealthy, meaning they earned it themselves. And yet a very large percentage have almost no debt (some have a mortgage, I think that's it). They must be doing something right, in my book.

**chisgran** · 08-24-2006, 06:47 AM

My new co-worker recently told me what his uncle use to tell him as a boy whenever he would want to spend money.

"You've got money & they want it and they'll do anything to separate you from that money."

Wow, I thought that was pretty powerful to instill in a boy. Trying to instill it in me now.

**rachelMcK** · 08-24-2006, 07:27 AM

Being a student, I'll throw in a few cents here...Starting in highschool, we're told that we need to know what we're going to be "when we grow up" when we're 14, but there was never any mention of how we are to afford this. When 18 hit, they had meetings about student loans, how they work etc. They never had meetings about having a part-tim job, they never discussed that avenue really at all. Most assumed that the parents would pay, and student loans would cover the rest. A dangerous combination. Not only do the students go into debt, but the parents as well. Personally, I had two jobs in higschool, plus I babysat a few nights a week. Saving my money as I went along, though because I worked so hard, I didn't have that much time to get the top grades (ie. scholarships). My parents were not helping me and due to their income, I did not qualify for student loans the first year. The school year ran from september to april....my savings lasted until january, then I had to find a job. I saved for 2 years with two jobs and only got through 4 months. Its disgusting (of course I spent a little more than I should, first year on my own, but not terribly). I lived frugally, ate spaghetti and frozen veggies for the rest of the year, collected reciepts etc. Then i went to a different college, moved in with my husband to combine income, worked through school. I am in my final (out of 4) year and have collected $30000 in debt, just to get by.
My point in all this is that they don't make it easy. They make debt a way of life for the student, there by (in most cases) solidifying the debt machine for another generation. Had I have known this when I started out, I wouldn't have got that credit card, or the loan, I would've been frugal with my savings for the entire first year. But they don't tell you these things, they make you figure it out, and more often than not, you're in debt before you even realize it. Its disgusting and wrong, but its all the north american corporate machine. They force consumerism onto students even if they don't want it...debt is a terrible thing, but when you first start out, its almost a necessary thing as well (so sad)...

**FarmerSue** · 08-26-2006, 11:05 AM

If any of you know any farmers.......farmers know DEBT. We are trying so hard to breakthat cycle but it is very hard. Our personal debt was never a tool for anything, just 2 spoiled brats who can't say no to three other spoiled kids. Our farm debt is a whole other beast. For some reason most farmers just accept debt as necessary and I don't think I know any that don't have debt. You think filling your car with gas is expensive.....try fillin a tractor and a combine and a grain truck and the list goes on and on and on. Still we are committed to figuring this out and learning how to farm debt free!