[quote=AN][quote=CA renter]The one difference I’ve noticed between successful people and unsuccessful people (my definitions, not necessarily mainstream) is that the successful people have tended to avoid debt at almost all costs.[/quote]
That’s the funniest thing I’ve read in awhile. I guess all the doctors who had hundreds of thousands of student loan were unsuccessful. How about many many white collar workers who didn’t have a silver spoon who had to get student loans to get their BS/MS/PhD. How about the many small business owners who got their first business loan to start their businesses? How about the many small business owners who got more business loans to expand their business? How about the millions of people who got a loan to buy their first house, then their 2nd house and rent out their first house, then their 3rd house and rent out their 2nd house, etc? I can go on but you get the point.[/quote]
Grants, scholarships, jobs, living at home, etc. while in college can all help to avoid student debt. In my family (almost all college educated, and most with graduate degrees or post-graduate credentials, etc.), very few have had any significant debt upon graduation (maybe $10K or less) because everyone did the community college->state university->more specialized/more expensive university for graduate work, if necessary. Everyone also worked their way through school, and most of us had a lot of full-time work under our belts by the time we graduated. This usually meant that it took longer than the standard 4-5 years for an undergrad degree, but we all had real work experience upon graduation, and this ended up being every bit as valuable as the pieces of paper in our hands.
As for small business owners, in many cases they can work their way up slowly, using profits to build up and expand their businesses. Others we know entered into partnerships and/or created privately held corporations and distributed shares to start-up investors.
Mortgages are okay, but I wouldn’t recommend borrowing more than 80% LTV, and would not recommend leveraging up to the max one can afford. Leverage is good when it’s going your way, but it’s probably the most common way so many “rich” people end up broke.
Yes, small amounts of *self-liquidating* debt can be helpful in some situations, but even in these cases, the people I know who managed to avoid the financial highs and subsequent crashes that so many experience were the ones who were always very, very conservative where debt and leverage were concerned. Most have made a point of avoiding, or at least minimizing, the debt they took on…and it was almost always “productive”/ self-liquidating debt, not consumer debt.
