A Wiser Retirement®
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A Wiser Retirement®
356. Does Debt Build Wealth? Understanding Good Debt vs. Bad Debt
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Debt tends to get treated as either a financial tool or a financial trap. The reality is more complicated. Borrowing can help someone buy a home, expand a business, or acquire an income-producing asset, but the same leverage can become a burden when the payment strains cash flow. The important distinction is not simply whether debt exists. It is whether the debt improves your financial position without exposing you to more risk than you can reasonably manage.
In this episode of A Wiser Retirement® Podcast, Casey Smith and Financial Advisor Michaela Dowdy, CFP®, go over the difference between productive debt and expensive financial mistakes. They examine all variations of debt while asking, What are you actually getting in exchange for taking on the debt?
Related Podcast Episodes:
Ep 298. America's Balance Sheet: A Financial Advisor's Deep Dive into National Debt
Ep 107. Get Rid of Debt Before You Retire
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Debt Is A Tool Not A Villain
SPEAKER_10Debt is often blamed for destroying wealth, but some of the wealthiest people use it intentionally. Why does borrowing money help one person get ahead while trapping another for decades? Today we are breaking down the difference between productive leverage and the expensive financial mistakes. Stay tuned.
SPEAKER_03Welcome to a wiser retirement podcast, where we cut through the noise and bring you real, honest conversations about investing, retirement, and building lasting wealth. No sales pitches, no gimmicks. Just insights to help you stop guessing and start planning your financial future.
SPEAKER_10Welcome to Wiser Retirement Podcast. I'm Casey Smith, and today I'm joined with financial advisor Michaela Dowdy. Today we'll be discussing one of the most misunderstood financial tools: debt. Hey Michaela.
SPEAKER_04Hey Casey.
SPEAKER_10Welcome back.
SPEAKER_04Thanks. Back on the pot.
SPEAKER_10So let's uh let's just dive right into this. Um these numbers are crazy. Uh 13.19 trillion in mortgage balances right now, which, you know, okay, that's good, I guess. Sort of. Uh people own people people own mortgages. Hopefully they're all above water. Yeah. Uh 1.69 trillion in auto loan balances, 1.66 trillion in student loan balances, uh, and then 1.25 trillion in credit card balances.
SPEAKER_04Yes. So insane.
SPEAKER_10No particular order, but if I was saying order of debt importance, I'd probably put it in that order. Um that's from the uh Federal Reserve Bank of New York, by the way. It's a quarterly report on household debt and credit. Uh all these numbers keep rising.
SPEAKER_04And this one's really recent. It was from the first quarter of 2026. So this isn't a dated value either. This is very recent. So um definitely something you're seeing
Household Debt Numbers And Trends
SPEAKER_04on the rise. And I feel like that's always a headline every quarter end almost rising debt among Americans, um, especially as cost of living has gone up and everything else. Um, and people are extending more debt than ever.
SPEAKER_10When clients tell you they want to be debt free, um, do you think that's the best objective?
SPEAKER_04Depends on the situation. I would say yes. For most instances, yes. You do ideally want to be debt free. Um, now is it a hard line? Absolutely, you always want to be debt free. Not necessarily. If you're a business owner, you're going to have to extend debt to yourself in order to, you know, typically get your business up and running, um, or even to buy, you know, different equipment, different software, you know, whatever it may be that you need, buy office building, those sorts of things. Typically, you're going to have to extend a small business loan to yourself or, you know, do some sort of business loan to some degree. And so, you know, typically that hopefully then pays rewards in the future. Not always, but hopefully it will. And so that's something that, of course, you know, that's not necessarily a, you know, hard line, you want to be debt-free or not. Also, of course, you know, there are different areas of time where you come into like you have to buy a new car or you have to buy, you know, because your other car has gone completely kaput. Uh, so, you know, there are times where absolutely, you know, debt is what you just have to do. And that's not always the ideal financial objective, but it is, you know, something that you do want to strive to have, you know, the lowest amount of debt typically extended to you. Um, but of course, you also just want to find that healthy balance for yourself.
When Debt-Free Helps Most
SPEAKER_04But um, and I think that's where you then get into this conversation, which we're kind of talking through today, is you know, what's good debt versus what's bad debt? Um, and is there kind of a hard line in the sand that you can draw that this is always good and this is always bad, and there's a good angel and a bad angel at some point.
SPEAKER_10I mean if I was counseling a person that was near retirement, I would say, let's get this paid house paid off even at a low interest rate because you've got uh retirement's really about cash flow. If it was a younger person, even at six percent, I don't know if I'd be in a big hurry. I I'd rather see it at like on a 15 year than a 30 year, ideally. Um, I had a 30-year mortgage for years. And then when interest rates got so low, refinanced to a 15 year.
SPEAKER_04Yeah.
SPEAKER_10I tell you what, it it's amazing how fast that balance drops on a 15 year absolutely. So uh I would say 20-year max um if that's possible. Uh I also think it's okay for people who want to own a house to take a 30-year just to get into the house. And as incomes increase and situations increase or income, income increase, situation improves overall, then um you can always refinance later or you can turn a 30 year into 15 just by making extra payments.
SPEAKER_09Yeah.
SPEAKER_10So there's not a like a hard line, not a not a Dave Ramsey old man screaming at people scenario.
SPEAKER_08Yeah.
SPEAKER_10Um why do you think though that some people feel still you know what you know what I'm talking about in a second when I asked this question? Why do people see debt as being so dangerous? And then other people are super comfortable with it. And we have both of those clients. We have clients that are super comfortable with it. I have some credit card debt, it's only like 10 grand. Or I I have a I have two car loans, but you know, paying $2,500 a month, but it's not bad.
SPEAKER_08Yep.
SPEAKER_10No, and then other families have spreadsheets for everything. Yeah and they're like no debt whatsoever. Yes.
Why We Treat Debt Differently
SPEAKER_04What's the I think it comes down to behavior, honestly, because of the fact of how you grew up. And I think a lot of people, how they view debt is in a reaction to what they saw in their childhood or what they saw around their family members around them. Um, and so, you know, a lot of that view is coming from okay, well, if they grew up in a family where, you know, money was hard and, you know, finances were really difficult and they struggled a lot as a family and they felt that as a child and growing up, then typically those are the people that are a lot of times really hyper focused on their goals and really hyper-focused on spreadsheets. If they've taken the route of like, we're going to not be in this position and I refuse to be in the position that, you know, I grew up in. Then that's where you typically see, okay, well, they don't want any debt, they don't want anything extended, and everything has been seen as bad. You also, though, have, you know, people that grew up with parents and family members that were telling them debt is awful. You don't need a credit card. Credit cards are bad. Um, and credit cards never work for you and they're just really bad and they're a slippery slope. And you just see people kind of projecting their own experiences onto this. And then that makes them view it either as dangerous or wealth giving. And you see the people that have, you know, had really great success in well or in their wealth and everything, as far as, okay, they extended a small business loan. They did these things that were very risky.
SPEAKER_07Right.
SPEAKER_04Um, even if it's using a business credit card, even, you know, they've done things that are very risky in order to potentially get a reward. And it thankfully worked out for them. Right. But that doesn't always happen. And so there are other ways to go about things. Uh, but I think that that's why you see a lot of times it's dependent on how they were how people were raised and how they respond. And I think people that are more comfortable around debt, they either grew up with it and it was never really a big issue. Um, or it's something the people they're surrounded by are in debt, just as similarly. Um, and so they're comfortable with it. Or um, and I think it's been, you know, even more so now, it's even standardized now to basically be in credit card debt, especially if you're a younger individual. It's like an expectation that you're going to be in credit card debt. And so if you have less than 10K, then congrats, you know, is kind of how people kind of view it. And you should not view it that way. But, you know, like um it that is something that, you know, it's really being spoken into because, and it's not something that you want to be a part of. But at the end of the day, I think it's as things become more normal as well to be in debt, it's normal to have a, you know, car payment that's over $800 now. You know, as those things become more normal, is where then you start to see, okay, now we're just really overextending ourselves. And that just makes it to where it doesn't seem as dangerous because now it's become more normal.
SPEAKER_05Yeah.
SPEAKER_04And um, I think that's also where you kind of pull pull from that. But again, the wealth building, I think, is a lot of, you know, just people having really great experiences with debt and that sort of thing and being able to eventually see the reward on the other end with their businesses or whatever it may be.
The Mental Weight Of Debt
SPEAKER_10How do you think debt affects someone psychologically, yeah, even when the numbers suggest they can afford it?
SPEAKER_04Yeah, no, I think it's something that really affects you in the sense of feeling like there's always something over your head. And I feel like that's with a lot of people that are in debt, is it it's either it's something that's gnawing away at them as a, I've got to get this paid down, I feel like I'm not getting it enough, or I really need to get this paid off and it's really tough. Or you have the other end where it's gone so far that now they have their head in the sand and it's like I can't get out of it at all. Right. I'm just gonna keep accumulating it at this point. Like, cause I've just dug myself to so deep, I don't even know what to prioritize next. And like it just keeps accumulating at that point. It's like it's never gonna end, so I'm just gonna keep living my life. Um, and then trying to find strategies to consolidate debt and do debt consolidation through like SOFI or something like that. And so um, you do see those, but I would say, you know, really I think it's that mental load. There's just so much stress. And I think that's also why you see, you know, one of the leading causes of divorce is financial issues and you know, debt being one of those main things that people that do have debt extended and families that have debt, it's a really large contributor to that just because it's a constant stress. We are constantly having to owe someone else, not just owe yourself.
SPEAKER_10Yeah. You have to be careful. People who are selling products make debt so free in our country, so easy to get. Um, you can buy your refrigerator and you know, a thousand easy payments of $19.99. You know, it's crazy.
SPEAKER_04Well, even like lease to own furniture now.
SPEAKER_10Oh, yeah. Yeah, that's like that's that's really big in some segments um of our uh um of our area now. Here in Atlanta, you see these places everywhere. I can't imagine leasing a couch. That seems so weird to me.
SPEAKER_04Seems so weird. I know. I'm with you too, because I feel like couches have a limited window anyway.
SPEAKER_10Very small window. Yes, very small window. Especially if you have children, yeah, multiple children, or if it's at a if it's at a beach, you know, depending on where you live.
SPEAKER_04Especially, I feel like with our people that own rental properties, they're always talking about replacing couches.
SPEAKER_10Every year, yeah.
Five Filters For Good Debt
SPEAKER_10Well, okay, so let's let's talk about what actually makes uh debt good.
SPEAKER_08Yeah.
SPEAKER_10So I would I would look at it as really kind of in five ways. Um, what is what does the debt purchase? So if the debt purchases a house or rental real estate or something they could appreciate in value, then I would say that makes it a better debt purchase. Uh every year at Christmas, I get a note from the Delta Community Credit Union to I can take out a holiday loan. So evidently you can finance your Christmas presents with a holiday loan and you can pay it back through the rest of the year. I can't imagine buying Christmas presents and having to pay it back. I'd be like, You're not getting Christmas presents this year. We're broke.
SPEAKER_04It's kind of like layaway, but you go through your bank and you can do it anyway. Yeah, I guess so. Yeah.
SPEAKER_10I guess so. So then I guess next one is uh could the purchase increase in value or generate income? Right. Um, so that thing that goes back to real estate. Um, you could maybe stretch it a bit. You could say some classic cars that have been already depreciated and are appreciating. Um you could look at other assets that have title potentially uh as having could go up in value, uh, but most things go down in value. Uh what is the interest rate and the total borrowing cost? So
Mortgages PMI And Cash Flow
SPEAKER_10if you're gonna buy a house, I had uh counseled a lady yesterday. Um if you're gonna buy a house and you're gonna someone was telling her to put 3% down on a house.
unknownOh, yeah.
SPEAKER_10And she because that's gonna make her pay PMI.
SPEAKER_08Yep.
SPEAKER_10PMI is pretty, pretty expensive. Um at least her ver her, there's different versions of that, but at least her version was. Uh, and I was like, you you can save $300 a month if you put down 20%. And she actually had the brokerage account to liquidate to put down about 49%, actually. And for her, I said, Well, this is a great investment for you, but I would put down the 49% because of your age. Uh, she was older and you only have 10 years to really get this thing paid off.
SPEAKER_08Yeah.
SPEAKER_10Uh, versus a younger person, we would hopefully put down 20% and left to rest in a brokerage account, right?
SPEAKER_08Yes, exactly.
SPEAKER_10Um, but you have to understand what the total what the total borrowing cost is. Uh, can the payment be comfortably fit? This is number four. Can the payment be comfortably fit within cash flow? Meaning, can you make that payment? If you buy the vacation home, you're gonna put it into an Airbnb, you're gonna rent it out to people. But if no one rents, I've been through that.
SPEAKER_04Yeah, can you afford that? Can you afford that?
SPEAKER_10The beginning of COVID, nobody was going anywhere, and then all of a sudden everybody went everywhere and it can y'all came back. But um, give can you afford that payment if there's no cash flow? Uh, what if income falls or the asset loses value? So just like you were saying. If your income comes down or your asset goes down in value, um houses did that in in top of 06 into 07, and then 8, 9, 10, 11 fell quite rapidly. Uh so if that happened to you, would you be turning in the keys to the house or could you weather that storm?
SPEAKER_09Yep.
SPEAKER_10Um, that's another another thing to look at. But I I would say that um, you know, the phrase, the statement, a mortgage is not automatically good debt. Would you say that that's a fair statement?
SPEAKER_04Definitely. And I think that that's what you were just talking about is I do think people put themselves in situations where unfortunately, you know, mortgages are are a very large cost for a lot of people. And that's typically one of their largest line items for their cash flow. Uh, but you know, you do want to make sure that if something horrible were to happen, you know, either the value of your home goes down or you lose a, you know, income stream, something like that, that you're able to still make that mortgage payment. Um, and so it's not automatically good debt if you're gonna end up being house poor. You know, and if it's gonna make it where you're gonna have to be, yes, if you can't furnish the house, if you can't put a bedroom suit in it and, you know, your living room furniture and all of that, then you don't need to be living in that house. Um, and so it's really you do have to take into all the other factors, as well as even like your property taxes, your insurance. Like, you know, there's so much more that goes into a home. And I think that even something that's so commonly, especially when you're looking at a mortgage, is people don't think about, okay, well, if we put all of our savings into this house for the down payment, well, I hate to say it, but like what if something horrible happens, you move in and then your HVAC goes out? Right. Well, now you don't have an emergency savings. Like you need to make sure whatever you're putting towards a down payment, you also still have something in the bank, you know, to fall on if something happens. Cause then when you go from a mortgage to renting, of course, you know, is always uh that's a transition. You don't get to call your landlord, you have to actually fix it yourself. You become a good one.
SPEAKER_10I told us Lydia yesterday it's a new house, but it said, hey, if something happens, you it's your problem, it's not someone else's problem.
SPEAKER_04Exactly.
SPEAKER_10Here's
Student Loans Need Real ROI
SPEAKER_10the one that we'll get to, I guess, probably later in discussion, but we can throw it in there now. Is is student loan. A student loan is not automatically good debt. Um I have this whole thing with student loans.
SPEAKER_04I believe, I believe, because I I think I've been on almost all the podcasts that we've talked about.
SPEAKER_10I believe that you should take your major, you should be able you go to the school's website, you you put in your major, which would be like a drop-down from all the majors, and then they tell you what the average student has made the first year out of out of college. And and maybe they don't have that alumni data, but there's databases that tell you what people are making, right?
SPEAKER_04Absolutely.
SPEAKER_10So you you then say, This is my loan, I'm a loan for this, and then it tells you what your return on investment is. Yep. Your ROI. So if you are a history major at a liberal arts school and you graduate, you're probably get a job that pays you $35,000 to $45,000 a year. But what if you just paid $200,000 for your undergrad?
SPEAKER_08Yeah.
SPEAKER_10That doesn't make any sense to me whatsoever. What if you decided you want to go into the ministry? Great calling.
SPEAKER_08Yeah.
SPEAKER_10But you want to go to Duke. So you go to the Duke divinity program.
SPEAKER_04Did I have a divinity program?
SPEAKER_10I don't know. Okay. Making it up. I mean you could have gone to UGA for free.
SPEAKER_04Yeah.
SPEAKER_10Like why would you spend all that money to go to Duke when you could have got a UGA on on Zell for free? Yeah. Right? So so if you want to be a doctor, maybe yeah, even stretch it out. If you want to be a pediatrician, they make like $150,000 to $200,000 a year. Yeah. So getting an $800,000 loan does not make any sense. No. You want to be a brain surgeon, that $800,000 loan might make sense.
SPEAKER_07Yep. Right? Absolutely.
SPEAKER_10So but it should be like a truth in lending was an act, what, back in the 90s or something. But there should be um, this should be truth in lending. And personally, this is this is taking it a step further. All the student loan forgiveness, it should not be on us as taxpayers to back that up. It should be on the school that told you to get the loan.
SPEAKER_07Yep.
SPEAKER_10Right. So you put the school on on the hook on the hook.
SPEAKER_07Yeah.
SPEAKER_10Then they're gonna be really careful about who they loan to and what degrees get what amount of funding. Yep. It fixes the whole problem. It fixes the whole problem. And it might make some schools struggle financially, potentially, but the strong, the strong ones would be willing to um probably do something like that. Of course, they'd be forced to, because the government would say, We're not backing these loans up anymore. And the banks are like, who's gonna back up these loans? These are babies taking a hundred thousand dollars worth of debt. It's crazy. Yeah, you just had to be you have to be so careful. Like so I I love Barrie College. I went to Barrie College up in Rome, Georgia. But if someone came to me and said, Hey, I can go to KSU for free, or I can go to Barrie College and I'm gonna come out with about, you know, $50,000 in student loan debt, I would say you go to KSU and get a free education.
SPEAKER_04Yeah. No, definitely. Especially, and I think this is becoming more and more of a conversation as well, as you're starting to see people really are starting to have those conversations of, okay, you know, at what point is there is a break point for getting a college education and, you know, making sure that whatever path you're taking. And we're starting to see that with the rise of trade schools becoming more and more prevalent. Yeah. Um, especially as those are becoming, you know, some of the highest paying careers at this point because nobody went into trade schools for so many years. Right.
SPEAKER_10How to replace a shower head and a faucet in a tub, and it was like behind the wall a little bit. You know, it took a it couldn't just do it on my own. I'm very handy. I could not do this on my own. $750 people, they were there for two hours. Yeah. $750. I'm like, I am in the wrong business.
SPEAKER_04A lot of hard work, but definitely, you know, it's something where, you know, trade schools are a lot more affordable and a lot different of a path to take. And you can still be making a wonderful living doing that. And so I think that's becoming more and more of a conversation, especially as college costs have become so astronomically expensive. And I mean, it's growing at six percent a year. And so people are, you know, even families that have saved are having to figure out, okay, you know, student loans are truly going to become something if you decide you want to go to these specific schools. Or and I think it's tough too, especially for children or I don't want to call them children, students. Um, you know, students in this decision-making process for student loans.
SPEAKER_10Oh, they've been they've been liked to they've been told, yes. Yeah, they they've been told you come get this degree and you're gonna make a hundred thousand dollars a year. Absolutely. And then they protest that they're not making the money when they graduate because they were lied to and on the front end, just because you go to a school doesn't guarantee you anything.
SPEAKER_04Definitely.
SPEAKER_10You went to school, I think you should go to school, you should go to college or a trade school. I think you should do something to better yourself. Yeah, you should think beyond your world in which you grew up in, think critically about things. But you don't, you definitely don't need um uh to borrow money to go do that.
SPEAKER_04No, absolutely. You know, and there there's a way to get an amazing degree, and I think it's at the end of the day, too. Like where you get your degree so many times, you've even done studies on it, is not something that's going to largely affect your career for a majority of career paths. Right. Um, for some career paths, yes, but in most, no, not really. Where you decide to go to school is not going to affect a lot. It happens. Maybe maybe your networking capabilities.
SPEAKER_10Yeah, your networking capabilities, but sometimes in certain in certain companies, uh, you if you go into a school, they look at you differently. Um, you know, Grace's husband works in in big commercial construction. And if you didn't go to Auburn, evidently you're passed over for everything at this company. So yes. You have to be part of the Auburn crowd in order to get there. And yeah, I I've seen that with Auburn people really are really Auburn people love Auburn people.
SPEAKER_04It's really funny. They they very much stick together. They're very big family oriented, not to bash on Auburn people, but y'all are very loyal to each other.
SPEAKER_10So much so promo uh stu you know, not promoting the right people, in my opinion, sometimes. Another part, I will skip on down to uh business loans. Business loans are are not automatically good debt either. Uh, but I think each one becomes more uh productive when the expected benefit reasonably exceeds the borrowing cost and the borrower can manage the risk, meaning that um you can manage the risk of taking out the loan if it doesn't work out, you'll be okay. If you went to school and you majored in finance, but there's a financial crisis and it didn't work out and you went pivoted a different way, but you didn't borrow money for the education, you're still in a lot better position than if you borrowed money and had all this money, uh, all this money owed. Pilots got stuck with that too during the um uh during the financial crisis. But even after 9-11, because they were borrowing hundreds of thousands of dollars to go to flight school. Yep. Uh, and then, and then the airline stopped hiring, they got stuck in a low-wage regional job. And then some cases, uh, we had people owe in $1,000 a month where their paycheck, their second paycheck of the month, which is usually their biggest, wasn't even big enough to cover the loan for husband and wife because they meet each other in these schools and get married. You have twice the amount of debt, right? So, anyway, um, so you have to be you have to think very clearly about that. Um
Renting Versus Owning Tradeoffs
SPEAKER_10all right, so mortgages and home home equity, let's let's kind of start there. Uh, the Federal Reserve, most recent survey of uh consumer finances found that that the median net worth of homeowner households was approximately $396,500 compared to about $10,400 for renters. So your homeowner automatically had a higher net worth than a renter. Um, my mind immediately went to well, the renters are probably younger people. And yeah, even if they bought the house, they wouldn't have that much net worth either.
SPEAKER_04So I don't know, I I don't know about the I do feel like this is very skewed because you have to think most of the time, you know, when you're older, you're gonna be a homeowner and you're gonna have more assets to your name. So you have people that have millions and millions of dollars. Now, of course, you do still see the headlines now, right now, out of especially like New York, yeah. Um, where people are talking about how, of course, you know, the ultra wealthy don't buy and don't purchase. Um, and so I know that's been a really big, heavy topic right now that I've seen being discussed is that a lot of wealthy people and wealthy individuals, you know, a lot of your big named celebrities about are not purchasing.
SPEAKER_10Don't buy houses, rent houses, they only rent, put your money in other things.
SPEAKER_04And they decide to invest in other things and invest in themselves and that sort of thing, which is very it's a very interesting take.
SPEAKER_10I have questions. First of all, could they even afford the place to look like who they think who we think they are?
SPEAKER_04Yeah.
SPEAKER_10And then two, if if they invested 10 years ago in New York City, think how much more money that would be. That's crazy, right? I know. So it might be a little uh I know it's very interesting.
SPEAKER_04Yeah, and uh there there's one specific uh individual that does a lot of financial uh posting and stuff, and she lives in New York, and it's and she's been talking about it. And she, I think, was even in Forbes talking about it here more to reach out.
SPEAKER_10Just certified financial planner?
SPEAKER_04Um, no, I don't think she's a license advisor. She does have a license, yes.
SPEAKER_10Oh, unsurprising. Usually these uh these big ones aren't licensed advisors.
SPEAKER_04Yeah, no, she has a she has quite a few credentials, um, but I'm don't think CFP is one of them. Uh but does it install annuities? No, she doesn't have any annuities. She actually really acknowledges to be against them. Uh, but she's she it kind of pivots towards the younger generation. She calls herself the zillenial finance expert. Okay. Uh so everything has kind of a pop culture swing to it uh to help people understand what's actually happening. Uh, but she does a really good job explaining things. And so I really enjoy just looking at her content. Yeah. Uh just because she does really break it down really well, um, especially for a younger demographic that's just trying to get into investing. Um, but not to digress from there, but that's one of the big topics that's been talked about here recently is just renting instead of actually purchasing because of the overhead cost is also so much lower with renting currently now.
SPEAKER_10So do you think a primary residence is an investment or a lifestyle purchase or both?
SPEAKER_04I feel like it's a both because it's something that has to fit into both of your, of course, yes, it is it can be an investment because I do think once you get your starter home, then that really helps you be able to get into, you know, a larger family home in the future. And then, you know, that really just compounds your wealth there. Um, but also at the same time, you know, it's a lifestyle purchase too, because a lot of people, you know, are choosing not to purchase a home because of their lifestyle, because they want to move around, because they don't see, you know, they don't want to have to fix things in their own home. They want to be able to call someone else and have them fix it. They also want the amenities that come with, you know, sometimes apartment or high rise of living, yeah, which is like you, you know, having the pool, having the gym, all of that included in your rent. Um, so, you know, there are there are different lifestyle choices there, or even just, you know, wanting to have a yard versus not, you know, things like that. So I do think it's both. Yeah. Um, it's just dependent on which kind of lens you're wanting to view it in. But I do think at the end of the day, they do go hand in hand.
SPEAKER_01Not all financial advice is created equal. Available now. Everything your financial advisor won't tell you. An eye-opening book that reveals what's really happening inside the financial industry and what it takes to build a plan that actually works. Because what you don't know could be costing you.
SPEAKER_10I'm trying to think through this. I I think we don't paint our kitchens or remodel our houses based off of what the market wants. It's what we prefer. Correct. He has a beautiful home in Marietta for sale right now that I looked at online. And the outside's like, this is this this could be the place. Like, build a legacy and grandkids come to. Yeah. And then I saw the inside. I'm like, they did not think about the market when they built the inside of that house. Like it's horrible.
SPEAKER_04Really?
SPEAKER_10Very artistic, I will say.
SPEAKER_04I wouldn't say it's horrible because it's not just like paint colors, it's like the house is laid out.
SPEAKER_10Well, not it's probably laid out fine, but the paint colors and the materials chosen.
SPEAKER_04Okay, got it.
SPEAKER_10You'd have to just start over again. I feel like unfortunate. It's been for sale for over a year. Yeah. So I'm not the only one that feels this way. But if it I'd probably say it's 30% investment and it's probably 70% lifestyle. But the 70% could be altered to where it could be it could be 30 lifestyle, um, 40 investment, and then 30 legacy. Because legacy lifestyle are a little bit different, but legacy is like you you found a place that like, you know, I picture like a legacy is a modern farmhouse on 100 acres and a grand pool, and then and then you've got you know eight bedrooms because all the kids come home with their their kids and everyone's happy and right. Yeah, probably doesn't exist in my world, but that's just what I picture, right? Yeah, like that's a legacy property. Yeah, you want like an estate, it's beyond lifestyle, right? That's just that's lifestyle and legacy kind of combined. Um now, if you go buy a rental property, that should be a hundred percent investment. But I I wouldn't say you buy your primary home because it's a good investment.
SPEAKER_08Okay.
SPEAKER_10I think you buy it because you buy it because you own it, you can make it yours. Um if it goes up in value, that's great. But you think of all the things you do to a house in your lifetime, it don't really make that much money. Because it's not generating income.
SPEAKER_04No.
SPEAKER_10Now you get sometimes you get lucky. We have clients out on the west coast that bought a home for 300. I think they sold it for 1.5 million a couple years later because all the techies moved into town in Seattle and the home prices skyrocketed. We experienced a little bit of that in Atlanta since since COVID, I guess. But typically here in the South, we had this small 4% increase per year. It wasn't better better off in the S P 500.
SPEAKER_04No, that's fair. I will say I think it's shifting a little bit as people start getting more and more into like rental properties. I think people are starting to view, especially I think the younger generation with looking at their first home as almost like a okay, well, if we have our starter home, well, should we keep it once we want to move? And so then it's becoming this, okay, well, this has shifted into an investment, you know? And, you know, I think people are starting to kind of view things now, even when they're looking at home ownership, you know, like, and I think this is conversations that I'm even seeing, you know, personally of just, you know, people that are really tr starting to consider, okay, well, for moving from this home to another, do we keep the house? Do we move out of it completely and sell it and use that equity to then purchase the new home? You know, what does our cash flow allow? Right. And so I think it is it's really interesting to see primary residences be purchased, of course, for the lifestyle, but then also, you know, even then be viewed as, well, now this can just be an investment property.
SPEAKER_10Going forward. Yeah. Well, then your then your mind changes.
SPEAKER_04Exactly. Your mind is changing, it's shifting. I yes, exactly.
SPEAKER_10And they'll generate income and that now it's totally different. You get to depreciate it for 27 years. Yeah, that makes sense. And I, you know, we have an example written down that I think that um is a good example, which we already already kind of got into this, I guess, by accident. But if a couple buys a home for $500,000, they put a hundred thousand down payment, so they finance the remaining, which is four hundred thousand. Over time, their equity may increase through the principal payment because you're paying down the principal over time. The the potential property will increase in value. And you could do home improvements that add value outside of adding bathrooms and extra bedrooms, though, I would say home improvements probably don't you don't get dollar for dollar.
SPEAKER_04No, absolutely not.
SPEAKER_10Um, however, their actual return on it, because people all the time tell me, Oh, we we paid $250 for this house years ago, and now we just sold it for um $600,000 and we made all this money. And I don't say anything, but in my head, I'm thinking, no, you didn't. Because you had to pay mortgage interest, you had to pay property taxes, you had to pay for insurance every month, you had to maintain the homes. You probably put new HVAC and roof, which are some of the most expensive things, right?
SPEAKER_07Yep.
SPEAKER_10You had all the transaction costs, all the points you paid down, or all the closing costs, or the six percent that went to the realtor, you're in the whole six percent just on realtors, right?
SPEAKER_04Uh and then striving the car off the lot.
SPEAKER_10Right, exactly. And then the opportunity cost of the down payment. So you put a you put that hundred thousand dollars down, but if that had been a hundred thousand dollars in the stock market, would it have done better? That's kind of your opportunity cost, right? So you have all these things that come off of that. But I think I think the main point is I think your primary home will contribute to your wealth building, but I don't know that um a primary home should be the focal point of your wealth building. No, absolutely. Does that make sense?
SPEAKER_04Nope. It it's a good segment to have a part of your wealth, but not necessarily the only builder of wealth. Um, but I do think for many Americans it is where most of their assets are.
SPEAKER_10Yeah. Uh yes.
SPEAKER_04For like a majority of their networks, probably not ones locked away in their home.
SPEAKER_10Probably not ones listening to a wealth management podcast.
SPEAKER_04Yes.
SPEAKER_10But yes. Yeah. For a reality check, um, yes, uh, most people have all their what their wealth is built into their homes, not their 401ks. They have their home and they have social security. That's the reality for most uh most Americans. Um, you know, I I think Mikhaila, we jumped ahead, uh, the student loan conversation. I think we covered that. I think we covered that. Exhausted that pretty pretty good.
SPEAKER_04I'll give you uh We're very passionate if you can't tell.
SPEAKER_10I'm
Business Debt Strategy Versus Speculation
SPEAKER_10gonna give you my thoughts on uh business debt. Um, so you know what is what is business debt for? If you're not a business owner, it's like, why would a business owner ever need to have debt? You might have to buy equipment if you're if you're hauling stuff for people, you might need dump trucks, maybe moving vans, right? Um, these things are expensive, by the way. Even a wealth manager firm, we have a lot of equipment. I think our biggest investment is probably MacBooks because there's almost 3,000 a pop.
SPEAKER_04At first, I thought you were just gonna say Mac, our podcast producer. And I was like, yes, it's Mac. We have invested a lot in Mac.
SPEAKER_10Mac the person. He's a great guy. Um, but dollar-wise, I would say MacBooks might still win. And the PC that Mac's on. That was that was the price of a small car. Um, inventory. Uh, so you're buying all those t-shirts to resell, um, the property in which you're in. Uh some people might buy their own warehouse to house their things. Uh, I already talked about technology. Uh, some people will finance marketing. Um, you think that might sound kind of silly, but you you go to finance marketing, you know, if you do a marketing strategy and you do it for a year, then you should be able to result in X amount of sales, and then it all kind of works itself out, right? Yeah. Um, that's what the the these are the risks that business owners take with if that marketing investment didn't work out, then you're stuck with a loan, right? Yeah. Um, professional practice or exiting a company. So if you're buying a dentist office, you might have to have to pretty big loan to buy that. Wealth management firms get so bought and sold all the time.
SPEAKER_07Yeah.
SPEAKER_10Uh the that's that's another thing. If I if I wanted to uh we grow organically, but if I wanted to buy another wealth manager firm across town, I could do that. And then we have all these new people and yeah, new business and and and if and then the profits from that would pay off the loan over time, right? Exactly. Um, and then you know, uh additional staff and operating capacity. Sometimes you have to borrow money. This is what SBA loans are for. You borrow money to hire four new people because you're gonna grow the firm to a certain level, and you pay off the SBA loan over time. So these are all the purposes. Um, so you have to think about what separates a strategic business borrowing from speculation. So you have to be very careful. This is what's a not all business that has good debt. Um, I see it sometimes with a franchise. Uh we have a podcast about franchising, which one of our more popular ones. But that all the all the time people say, I want to buy into this franchise. And you're like, Oh my gosh, that's what I'm you're gonna you're gonna spend $500,000 buying into this franchise. You know nothing about running a business. They're gonna give you guidance, which is good. But then, but then like, what if this doesn't work out? What if it doesn't hit no one's guaranteeing that you'll be able to sell it back to anybody for $500,000?
SPEAKER_07Exactly.
SPEAKER_10So these are these are risks that you um that you that you have to that you have to be willing to calculate before you take um that really you want to make sure you have that good business plan put together of really understanding how you're gonna be successful, you know, and you have to think about other things like business owners have to sometimes personally guarantee loans. So you're if your business doesn't work out, not only do you lose the business, but you're gonna lose your home.
unknownYep.
SPEAKER_10And we've witnessed that a few times over the years with people who have personally financed and in the end they were able to negotiate keeping their home, but in but they obviously at some point had to sell the home to then really get rid of all the debts. So it's kind of it's a sad situation. That's that's where um a lot of the successful people in the US are business owners and they took the risk and it and it pay paid off. Um, but there's a lot of casualties that you don't see or hear about.
SPEAKER_04Exactly. And I wish we had the stat on it in front of us because I know it is a really staggering number, and we've talked about it on prior podcasts. I would just out of the you know, businesses that do, you know, you know, come into you know, success, there's so many more uh that actually never actually got that level and it got to that level. So it's definitely something that you know in different areas, it's great to take a risk, but you do want to figure out, you know, be able to take a balanced risk at the end of the day that's not just gonna destroy you completely.
SPEAKER_10Yeah, you think about a business owner who borrows a hundred thousand dollars at eight percent. So if that hundred thousand dollars creates thirty thousand additional net cash flow, then that's a good deal. If it generates five thousand dollars, it doesn't make a whole lot of sense, right? Yeah, um, another one I another business I've worked with a long time ago is a cleaners. That those um the equipment they have to buy is so expensive. And they they they will need to buy new equipment. And I started doing the math. I'm like, you're not you can buy the equipment, you can finance this, but you don't have enough volume and pricing isn't right in your in your business to where you're actually gonna make money. You created a job for yourself.
SPEAKER_07Yeah.
SPEAKER_10So business owners you have to be that's one of the things I look at is do you have a job or do you have a real business? And those are two two very different things. If you just have a if it's just a job for you, you don't need to be taking out any loans. Because you're not thinking like a business owner, you're you're thinking like a person who has a job.
SPEAKER_04Definitely. There are two very different things two very different things.
SPEAKER_10Federal
Credit Cards Auto Loans And Rules
SPEAKER_10Reserve reports that 46% of credit card owners carried a balance at least once during 2024.
SPEAKER_04This seems low to me. It does seem low. 46% seems really low to me. When I was reading this, I was like, this is fascinating that it's only 46. Because I just feel like credit card owners, majority of the time, they're gonna have at least one month out of the year for a majority of Americans that they're going to carry a balance on that card.
SPEAKER_02Yeah.
SPEAKER_04Um, for at least one statement. So it's very fascinating to me that this is saying only 46% of Americans.
SPEAKER_10Um I'm of the opinion that you you should have zero credit card debt. But it's it's you also have to you also have to make sure you're not outliving your lifestyle. That's where you typically where credit card credit card um debt is coming from, is is living beyond your means. Sometimes it's medical costs, sometimes it's things that happened. And that and that's that's a little different because it's it's easy to use a credit card, but it's really hard to escape the revolving credit card debt. Like if you have a debt, if you have a balance every month, you now have to get it, you have to you have to go get it paid off and that keep making all the current charges. That's why Dave Ramsey in this in his whole program has you live enough cash. Yep. Like you're, you know, a hobo. Right?
SPEAKER_04Yeah, that's a word for it.
SPEAKER_10Yeah, I mean, because it seems silly, and people are like, I'm not gonna go to cash system, that's not safe, you know. It's like, I don't know. It means people getting robbed because they have cash. No one expects you to have cash in your pocket anyway these days.
SPEAKER_04Not anymore.
SPEAKER_10The reason why he has you do that is so you can get off the credit card usage, it gets you off the crack, right? Yep. And then and then you get those balances all paid off in order is the snowball method, which we have um that's actually in our book. If you if you uh the snowball method, we talk about getting out of debt, one of the chapters and um uh everything your financial advisor won't tell you the same less pump. That's why it's so hard to get off because if you keep using it and then uh and you get it chunks paid off, you just need to be off of it for a while.
SPEAKER_04Exactly.
SPEAKER_10And then you can go back to it, back to using a credit card, get the points or whatever, but it's like you have to be disciplined in and how it's used.
SPEAKER_04Yeah, and that's where you know credit cards really can be beneficial to a degree for some people, but they can also be extremely detrimental for others if you don't really know exactly how much you're spending month to month, and it just becomes a crutch that you just kind of lean on and consistently spend. And I think even a common misconception, which may be where you were going, is that you know, using credit cards as really your like emergency savings. Oh, yeah. So many people, you know, um think that that's what they can utilize. They're like, well, I have $20,000 that can be extended to me on my credit card. So that's my emergency savings. Yeah. Yeah, but you're not thinking through the fact that, you know, that's then gonna be at 22% interest or 29% interest, even, you know, depending on what your credit card says. Right. And, you know, then that's so much worse uh than just pulling out 20,000 from your savings account. So definitely, you know, a revolving thing, like you were saying, that you definitely don't want to be overextending yourself on.
SPEAKER_10I I I don't think people our listeners probably struggle with credit card debt that much. Um so we'll we'll move on, but but it it it's uh if you know you have a problem, don't use it, use a debit card. That's what I would say. If if if you otherwise you can use a system to get the points you need, uh go for it. I mean, I don't I very rarely buy airline tickets. Everything this company's run through an Amex. So it's it's it's it's it's um it's great. We go to a conference, I can use points. I don't have to shell out thousands and thousands of dollars and in airfare. So we make it work for you. Just don't let it kick you in the rear end. Um auto loans, Dave Ramsey wants your auto loans gone. There's 1.69 trillion in uh in the first quarter of 2026 in auto loans. Um, I I would say don't go crazy. I understand it's really hard to go pay cash for an $80,000 car, especially if you're a younger person. Um, but I would say look look for something that is reasonable. Um, I love BMWs. I've gotten all my BMWs through the certified pre-om program where they had less than 16,000 miles on them. Yeah, they come and because I buy it, I think usually an employee has driven the car, but because I buy it that way, they give me a limited mile warranty. So the warranty might be for three years, but then sometimes I'll run specials, they tack on two more years. You have a five-year bumper to bumper, and now it's unlimited miles. I was my last car that I had with through them, I was getting 80,000. I had 80,000 miles, still getting bumper to bumper service. Yeah. Because I put a lot of miles on my car.
SPEAKER_04So it's it's trying to do it a little more smart than just going out there and paying full price for exactly, you know, yeah, and and being mindful with what you can reasonably afford um as well. Cause I think there's, you know, something to of just even if you're paying like for, you know, a child's car as well, you know, making sure, you know, once they've reached that milestone of 16, making sure that you're you're taking into account your own cash flow at that point. Um, and you know, being reasonable because there are affordable cars out there that you can purchase um that are not going to be, you know, a hundred grand, you know, necessarily. Oh yeah. Uh, you know, 80 grand. I mean, there's still like there are trucks out there now you give like 25, which is crazy.
SPEAKER_02It is crazy.
SPEAKER_04Yeah. Um, I would try to pay today.
SPEAKER_10Try to pay cash for a car and remember that you you may have to live like no one else today, so you can live like no one else tomorrow. Yep. Right. Another Dave Ramsey quote.
SPEAKER_04There you go.
unknownYeah.
SPEAKER_04But don't get I feel like don't get too swindled with all the TikToks and everything else out there.
SPEAKER_10I learned a long time ago. No one cares about what kind of car you're driving because they're more concerned about what kind of car they're driving.
SPEAKER_08Yep.
SPEAKER_10Right. So don't try to keep up with the Joneses or the Smiths or whoever, right? We're trying to keep up with. Just stay in your lane, do your do your thing. Um, I'd say most of our clients drive up in Hyundai's, Toyotas, and Hondas.
SPEAKER_04Yep.
SPEAKER_10That's the most car choice of multi-millionaires, actually.
SPEAKER_04Absolutely. And I would say, yeah, Toyota, I feel like is always the standout there to you.
SPEAKER_10I was actually in um Omaha, Nebraska, uh a while back ago. And I saw Warren Buffett. He was You saw Warren Buffett. I saw Warren Buffett. I was sitting in the lobby of the hotel.
SPEAKER_04This is crazy.
SPEAKER_10I was sitting under the lobby. I have lots of stories, Mikhail.
SPEAKER_04Right another book.
SPEAKER_10I was sitting in the right another book. I was sitting in the in the lobby of uh the hotel and I looked up and he's kind of a short guy. But I saw Warren Buffett walk into the lobby. I was like, Oh, that's Warren Buffett. And he was walking with another guy. And you know what kind of car he got into? Honda Civic.
SPEAKER_08Really?
SPEAKER_10He got into a Honda Civic and I asked the doormaster, does he come here a lot? And he goes, Yeah, I think he does presentations or he meets other executives here. He's like, Is he always in that car? He's like, Yeah, that's his car, Honda Civic.
SPEAKER_04I'm shocked. I feel like it'd be like a Toyota or something like that. I feel like that's always what you hear of like one people drive Toyotas. One of the wealthiest things in the world, yeah. Honda Civic, it's a good one.
SPEAKER_10He wasn't even getting to a limousine. It was just, you know.
SPEAKER_04Yeah. No SUV.
SPEAKER_10All right. So
Borrowing To Invest And FOMO
SPEAKER_10investment loans. Why do we have a chapter on this? What the heck? Probably because they say don't do it. Why would you borrow money to invest in the stock market?
SPEAKER_04Or I would even say, you know, I feel like we see so often, you know, people wanting to take home. I've had this question quite a bit here recently, actually. Um, in, you know, wanting to take out home equity loans in order to participate, whether it be in the market, in the market or getting into rental real estate, or that's a sign. Those sorts of things. And so definitely something that we always don't want to, we don't want to do that. Uh, but you know, having conversations like that where hey, a HELOC is not what you need to be doing right now.
SPEAKER_10Uh that's usually a sign that the things are topping out when you have people trying to leverage up. That's usually a sign to to start getting more conservative.
SPEAKER_05Yeah.
SPEAKER_10I I tell people this you want to okay, investing in real estate, investing in in other things, that's that's great to help build wealth. Um, but you want to do it from a position of strength.
SPEAKER_04Absolutely.
SPEAKER_10And so in order to do that from a position of strength, you're gonna have emergency reserve, you have no credit card debts, um, you're gonna have a house that's on track to be paid off a reasonable amount of time, and then you're gonna have extra money. You don't know what to do with this extra dollar. And that extra dollar goes into an opportunity fund, which you can then build to go do other things. Now, there are uh things you can loan against. You can loan against a stock portfolio, not in your IRA, but you can uh in a brokerage account, you can loan against that. And we do that here sometimes. Schwab is Schwab Carl Schwab is basically a bank, and we'll simply or we have access to Goldman Sachs as well. Uh, we use Goldman Sachs Bank. Um either one, uh, we'll borrow money against a brokerage account. So see you have five million dollars in there, you can borrow typically up to probably three million, and someone might do that to build a house. And then the reason why they do it because it's still gonna be like six percent, but the reason why they do it is because if um well one, they want to um build a house or buy a house, then sell theirs. So they want to move and and not have to go through where am I gonna stay.
SPEAKER_08Yeah.
SPEAKER_10Uh and they don't want to liquidate their portfolio because they have a lot of capital gains. So it's better in a short time span to do these security-based loans to make the transition. And that that makes total sense to me. It's not a loan that you want to keep for years and years and years, uh, a little too expensive for that. Might be better to do a traditional mortgage, but a traditional mortgage for you know nine to 18 months is gonna be very expensive because of the upfront cost, right? So that that kind of loan uh makes sense, but I wouldn't be doing personal loans to invest. Uh we we see this every now. We saw this during the crypto wave, not not the current one, but the one way before that, uh, before that went into a big down roll spiral called Crypto Winter. Um we saw people borrowing money, lines of credit to buy Bitcoin. Which um I wouldn't do that, I wouldn't put my house up for risk to do that. I wouldn't even get a personal loan to do that. So I think the the main point here is it's gotta have an uh an ROI. We don't want to be borrowing money because oh, we think we're getting left behind on something. Yep. You save up money to do that.
SPEAKER_04Yeah, don't let the fear of missing out, you know, dictate your financial future.
SPEAKER_10Something else, I guess, probably along the same topic is buying the uh buying uh rental real estate. So people will buy a rental property to go up in value, they then leverage that to buy another one, to buy another one, to buy another one.
SPEAKER_04It's just a chain.
SPEAKER_10I don't I don't necessarily think that's a bad strategy. It's really not different than a business owner taking risk and how they build their business. I would say keep your primary home out of it.
SPEAKER_09Yep.
SPEAKER_10You want your primary home, you don't be signing your primary home as leverage for any of these other properties. Yeah. If you lose it all, you want to know that your home base is secure. That would be my only advice.
SPEAKER_04Absolutely.
SPEAKER_10All right. Should
Pay Off Debt Or Invest
SPEAKER_10you pay off debt or invest?
SPEAKER_04The the common question we get. That is a very common question.
SPEAKER_10So things you consider. What's the interest rate? Is it fixed or variable? Um how much available cash reserves do you have? Is your employer plan matching contributions? Um, where the tax considerations, what's your time horizon? How stable is your income? What's your risk tolerance? These are all questions that you want to ask. I think the answer almost always comes back to no.
SPEAKER_04Yep. Majority of the time. It's very rare that that is what you need to be, you know, uh doing instead of paying off your debt.
SPEAKER_10Yeah. I mean, there's a there's an order to all this financial planning stuff. And again, I kind of alluded to it a minute ago, but it's it's uh no stupid debt, no credit card debt, no uh build up a reserve, you know, six months worth of expenses and a reserve account. Uh then are you on track for retirement? Do you have the kids' college strategy laid down well, and then finally opportunity money. And so this kind of falls along with this. So you don't we don't want to um be investing money when if something bad happens, we have to go liquidate it, potentially in a fire sale to then try to cover our liabilities.
SPEAKER_04Yeah. I feel like I like this next point where it's talking about the signs that good debt has turned bad. And I think that a lot of times this can, you know, occur where it started off as a really good investment and then over time it's just you know become a problem. Um, and I think one is just the payment prevents you from saving for retirement. You know, uh you've had a difference in income, that sort of thing, and now you're no longer able to save in the same capacity. Um, or you know, you need bonuses over time or investment gains to make the payment. Um again, so really still, you know, pivoting around that payment, or interest rates variable. Um, and so it's, you know, continuing to increase with the market there, or the asset is declining in value faster than you can get the loan paid off, even. Um, or you know, lastly, you know, the debt only works under an optimistic financial, you know, position and projection. And so, you know, those are all areas where you do want to make sure that you're continuing to stay in good debt just because it was good debt once doesn't mean it's going to continue to be good debt in the future. So you do want to know when to kind of cut off your sunk cost at that point and just move on to the next thing.
SPEAKER_10All right,
Rapid Fire Debt Scenarios
SPEAKER_10we're gonna do a rapid fire, Michaela. Oh gosh. Good debt, bad debt, or it depends. You ready? Here we go. Yeah. I'm the moderator.
SPEAKER_04You're the moderator. Oh no, you don't get to get put on the spot. Okay.
SPEAKER_10Uh a 3% mortgage with 10 years remaining.
SPEAKER_04Mostly good debt.
SPEAKER_10Uh 7% mortgage on a home that consumes half of a person's take-home pay.
SPEAKER_04Bad debt.
SPEAKER_10Uh, a student loan for a medical degree.
SPEAKER_04Depends. We were talking about it earlier. Uh what kind of you're going into the field uh of which medical doctor you're pursuing there.
SPEAKER_10$90,000 loan for a degree with uncertain job prospects.
SPEAKER_04That's bad debt, just like we're talking about earlier.
SPEAKER_10A business loan used to purchase profitable equipment.
SPEAKER_04Uh could be good, but depends on how profitable we're being.
SPEAKER_10Right. So you say it depends.
SPEAKER_04Yep, it depends.
SPEAKER_10Um, a HELOC used to renovate a kitchen. That's a hard one.
SPEAKER_04Ooh, that is a hard one. Um, I think you'd have to look at your full financial picture on that to see if that's really worthwhile. So I'm gonna say it depends.
SPEAKER_10Depends. Okay. HELOC used to buy stocks.
SPEAKER_04Uh, bad debt.
SPEAKER_10Zero percent promotional loan for furniture.
SPEAKER_04You know, I'm gonna lean towards good debt.
SPEAKER_10You really think so? As long as you get it paid off.
SPEAKER_04As long as you get it paid off. It depends on how much furniture you're buying.
SPEAKER_10Because if you don't pay it off, it's gonna be like 49% or whatever the natural max is.
SPEAKER_04Exactly. So as long as you get it paid off, uh, I think I could see this as if you're keeping funds invested or in a high yield savings count, then yes, this could be potentially worthwhile as long as you get it paid off.
SPEAKER_10A 72-month auto loan.
SPEAKER_04Oh, that's good debt, relatively, depending on how much it is. But it could depend on the value there. 72 months, I feel like is pretty reasonable. Five years, right?
SPEAKER_10Okay. Depends. That's what I would say. Credit card paid in full each month. Is that even debt?
SPEAKER_04I wouldn't really call that debt. If you're paying off the statement balance, I mean, I guess you're using your credit line, but not really, even at that point.
SPEAKER_10It says credit card, not not charge card. So I think I think the intent here is uh is good debt, right? Yeah. Uh a margin loan used by a retiree.
SPEAKER_04Ooh, I don't like that. Bad debt.
SPEAKER_10A loan used to purchase rental property.
SPEAKER_04Uh just like we were saying earlier, it depends.
SPEAKER_10Yeah.
SPEAKER_04You want to make sure it's affordable to you.
SPEAKER_10I'll go with you most of those. Um, all right. Well, in the end, you know, there's there's just so many um so many. Well, let's just say this. When you're making these decisions yourself, you are emotionally attached to them. And you can probably justify anything. It typically starts with, I deserve it. I work hard.
SPEAKER_04Yep.
SPEAKER_10Sally or Bob have it. Why can't I have it? These are all things that they that that you tell yourself. And this is why people have financial advisors because they walk in the door and they look at me or you or uh Shauna or William and they say, Should I do, should I do this? And we are not emotionally attached to whatever the do is. No, we're not. And so we can make mathematical decisions and say, Yeah, this makes sense, or no, this is a terrible decision.
SPEAKER_07Yeah.
SPEAKER_10So in the end, um, what are you buying? What's the total cost? How does it improve my financial position? Can I afford it if circumstances change? What am I giving up to make this payment? So many people not listening to Wealth Management Podcast probably think, can I afford the payment? And that'll think about the anything else other than that. And that will get you into be a slave into debt for the rest of your life.
SPEAKER_04Absolutely.
SPEAKER_10Uh, thank you, Mikhail. That was fun.
SPEAKER_04Yeah.
Closing And Calls To Action
SPEAKER_10Uh, thanks for listening to today's episode. If you're interested in learning more about wiser wealth management, you can visit us at wiserinvestor.com to book a consultation of one of our feeling uh fiduciary financial advisors. I'll see you guys again next week.
SPEAKER_00Thanks for listening to a Wiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today, head to wiserinvestor.com and reach out. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets, or any other investment vehicle or basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guest may personally own securities, digital assets, or other investment vehicles mentioned on this podcast. Neither the host nor guest of the show are compensated for their participation, and no referral fees are paid to or received by any host or guest for clients, listeners, or similar interests. Investments involve risk, and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional, andor legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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