This is a question that comes up a lot these days, and there is a host of people who have differing opinions about it.The honest answer is no. Like narcotic painkillers, guns, knives, and a plethora of other things, debt is a neutral tool.
A lot of people disagree with this thought. One of the most outspoken people against this you may be familiar with is Dave Ramsey. I will admit, he is a very smart obviously wealthy man and assuming he practices what he preaches he is a financial wizard worthy of respect and admiration. The truth of the matter is, though, working class folks like me would have practically nothing if not for debt. The challenge is using debt responsibly.
Doing Debt Right
As an example, I have a credit card I use for my business. I use it to buy all of my supplies because as a general rule I get somewhere between 2%-5% cash back. I do always make sure that I pay it off in full every month though to avoid paying interest charges.
Buying a home is another example I am sure most everyone can relate to. I would be willing to bet upwards of 98% of homeowners would not have been able to buy their home without a mortgage. I am sure a lion’s share of car purchases follow this trend.
How Debt IS evil!
So why do so many people think debt is such a bad thing? The truth is the problem isn’t debt, it is the people using debt. It is easy to fall into the trap of using a credit card to buy things that you couldn’t afford otherwise and really don’t need. Since you obviously don’t have the money on hand to pay for it, it is likely you will end up paying interest on your purchase which in the world of credit cards averages over 15%. If you only pay the minimum amount each month, on average that $1,000 TV you just bought will be paid off in five and a half years and cost you just under $1,500.
While that might not sound too horrific, it gets worse when you look at the national averages. The average United States household carried $16,061 in credit card debt in 2016. Using our same figures as before, you could pay it off in 5 ½ years for $23,590.14. Yep, you paid nearly 50% more just because you didn’t want to save and pay for it.
The moral of the story is, debt can improve your lifestyle or crush it. The difference is your level of personal discipline and fiscal responsibility.