Good Debt, Bad Debt–or No Debt?

by Roberta MurphyCarlsbad, CA

Scott Murphy recently focused my attention on a Yahoo Finance article, The Myth of Good Debt –originally posted on US News and World Report. It’s a good reminder for us all.

In short, the author says all debt is basically…debt. It’s an obligation one owes to another, and that’s not necessarily a good thing. Still, most of us wouldn’t be able to buy a home in San Diego if we weren’t able to get a mortgage or loan to do so.  For most, it is also necessary to obtain financing when buying a car.

These are probably better loans than ones used, say, for shopping excursions, dinners out, entertainment and the like.  Most would agree that this is stupid an unwise use of debt–and a trap into which many young people and students fall.  Some are even wondering about the wisdom of student loans that take around two lifetimes to repay.

I’m a San Diego Realtor and wouldn’t be doing much business if mortgage loans weren’t available. The ability to buy and sell homes is largely dependent upon mortgage financing–just as car dealers depend on competitive auto financing and leasing.

Good debt may be a myth, but with mortgage interest rates at all time lows and San Diego home listing inventory contracting, it might be the time for even the most debt-shy buyers to consider buying real estate. When mortgage payments are less than rental costs–especially in coastal Southern California–it’s the potential opportunity of a lifetime.