[quote=CA renter]Grants, scholarships, jobs, living at home, etc. while in college can all help to avoid student debt. In my family (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.[/quote]You’re talking about exception here. On average, that’s not the case. That’s why there are plenty of sayings, such as “high risk, high return”, “no guts, no glory”, etc. Bottom line is, you need debt to get anywhere close to be financially independent.
As for small businesses, most do not work up slowly. How are you supposed to open a restaurant by working up slowly? How much do you think it cost to start up a business like a restaurant or a electronic manufacturing business? Some of the equipment they need to even start the business cost hundreds of thousands. How long do you think it would take for someone to save up hundreds of thousands?
You say mortgage are OK but mortgage is a debt and for most, it’s the LARGEST debt they take on. So, you can’t possibly say: [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] then turn around and say mortgage debt is OK. BTW, 80% is a HUGE number.
You’re right, leverage is good when it’s going your way. That’s why there are saying like “high risk, high return”, “no guts, no glory”, etc. You take the risk, knowing that if things doesn’t go your way, you’ll be in a world of hurt. But on the flip side of that, if you don’t take the risk, you’ll never be financially independent. If you’re content to be in perpetual mediocrity and be dependent on your boss, then feel free and stay debt free. But for those of us who are trying to be financially independent and did not win the ovary lottery, we have to take those risk and leverage to get us there.
You like to point out that there are those who got burn due to leverage, but I also like to point out there are far more people who greatly benefited from leverage. I also like to point out that most of those who are debt free all their life tend to be renters. You can’t be debt free and little debt all of your life and own a home. We’re talking about needing to have hundreds of thousands in debt to buy your 1st home. Who do you know that buy their first home for cash from which they saved?
BTW, how many in your family is a doctor? How many in your family live in a city/town w/ no real good college? I’d like to see a single doctor who graduated debt free for w/ <$10k in debt w/out parents paying for part or all of the cost.
