Re: Debt (Was: How much is a FICO score worth?)

"HW \"Skip\" Weldon" <skip5700removethis@[EMAIL PROTECTED]
> writes:

> An overriding objective of good personal finance is to live within
> one's means.  By that I mean that there are no unpaid balances at the
> end of a month - everything is current.
> 
> I mention this just in case someone thinks that because of our
> emphasis on FICO scores, it is acceptable to have debt.  For the
> record, we can make exceptions for younger folks who haven't had time
> to pay off their home mortgage.  Beyond that, no.

You seem to refuse to differentiate between good debt and
bad debt and imply that *all* debt is bad.  It's not.

The main consideration which distinguishes between good
and bad debt is the matter of what the proceeds were used
for.  If the debt was incurred in the course of increasing
one's wealth - or potential future wealth - it's likely
to be good debt.  If it was incurred in the course of
consumption and the purchase of quickly depreciating assets
(ie. televisions), it's likely to be bad debt.

But you're certainly partially right.  Some debt is bad,
and most *consumer* debt (ie. credit cards with oustanding
balances) is bad.  And if someone can't tell the difference
between good and bad debt, he probably should try to avoid
all debt.  Just as someone who can't distinguish between
good and bad mushrooms should probably only buy them at
the supermarket instead of picking them in the woods.


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