Is mortgage debt good debt? A dangerous drug? Or both?
All debt acts like a drug.
Debt artificially changes your personal financial metabolism, accelerating personal consumption, and exaggerating investment losses and gains.
Like any pharmaceutical, debt can be life-saving. Without debt, you might have to wait an additional 10 years before you’ve saved up enough to own your home. Without debt, you might not be able to eat, between now and better employment, 3 months from now. Without debt, your further education plans never happen. Without debt, you’d be stuck. Debt can be awesome.
Like any pharmaceutical, debt can also be life-destroying.
A mortgage, because it’s the largest debt most of us can qualify for, is the ultimate drug. Just because a mortgage can make the dream of home-ownership a reality, provide investment leverage, offer tax advantages and a hedge against inflation doesn’t make it any less dangerous for certain parts of the population.
Mortgages are powerful drugs and in any given group of people some of us will abuse the pharmaceutical.
Please see related Mortgage posts:
Part VIII – The Cause of the 2008 Crisis Post read (6865) times.
Thanks for visiting Bankers Anonymous. Be sure to sign-up for my newsletter so you never miss what's happening on my site. You can also connect with me on Facebook and Twitter to keep the conversation going.