[xp84]

> " 2. Avoid Debt Like the Plague"

Does anyone else feel like they overindex on this principle? I have on multiple occasions found myself too conservative to take advantage of the leverage available to me. (Example: doing a refinance in 2020 I could have taken out a 30-year mortgage at the rock-bottom rate, but chose to do 15. This is irrational given that I could have taken all the money I didn't have to pay toward the mortgage and even putting it in completely safe investments, come out ahead (even before considering the mortgage interest deduction).

I'm not saying I envy those leveraged up to their necks, but I think growing up in a family that didn't really have any money and did have a lot of the bad kind of debt made it hard for me to feel comfortable owing money even when it would probably be in my best interest (no pun intended).

[Garlef]

Yes. That part should be taken with some caveats.

And unless you're born rich, you start your life with debt: You need some form of retirement money for the last 20 something years you might not be able to work anymore.

If you buy assets on a loan/mortgage/etc, it's more like you're materializing this debt early.

[linguae]

Wow, this is very insightful and I haven’t looked at saving for retirement as a type of debt before! Thanks for sharing!

[DavidVoid]

Yes. I'm sure it would feel nice to pay off my apartment loan, but the interest rate on that is 2.75%, which is way lower than what I can (reasonably) expect to make on the stock market.

[gen220]

I think of debt-avoidance sort of like teetotaling: I understand where it comes from and empathize with it but I tend to agree with you that total/dogmatic avoidance feels unnecessary and maybe even deleterious in the limit.

Like alcohol or drugs, debt can easily be abused, and there is no shortage of people and corporations waiting to make a profit from selling you debt, alcohol and drugs in difficult or joyous circumstances.

Using debt as a tool requires a degree of "know thyself" wisdom and financial literacy that many people struggle to possess in their best times, let alone hold onto in their worst times. So the "overcorrecting" edicts ("avoid debt like the plague") probably do more harm than good, because most people don't care about the finer/nuanced details of these things and want simple rules to follow through good times and (especially) bad times.

The motivation behind the statement is all about avoiding ruin, not maximizing opportunities or even happiness. They're different goals but it's easy to confuse one for the other.

[sowbug]

Yes. I wish my parents had been more nuanced in their advice about debt. Carrying a revolving balance is way different from borrowing to buy a home, for example.

I was proud to pay off my mortgage early, but missed out on nearly 20 years of tech-stock growth. That's a chasm rather than a nuance in retrospect, but there isn't a lot of nuance in aphorisms like "Avoid Debt Like the Plague."