We are well served to mind the quote given by 4plexowner: it is far better to collect interest than to pay it. That’s the position I am in now. Individuals’ net worth is improved when cash, which would go to pay interest on cars, credit cards, houses, furniture, is instead used to invest in savings, education, or other appreciating assets. Using cash to service debt is a horrible use of resources and shows a lack of discipline in financial matters. Americans love to take on debt to buy what they want when they don’t have the money. Imagine the average American spends $300/mo. paying interest on her car and credit cards. Imagine she didn’t have those debts, and instead used the $300/mo. to put into a savings account, sends it to orphanages or Doctors Without Borders, or uses it to get a Masters Degree. What a more productive world we would have. Interest paid enriches financial institutions, but doesn’t create anything of value.
Corporations can use debt to invest in their future: expansion, research and development, mergers.
The quote made about interest is a good one. I am in agreement with 4plexowner on this one. His post refers to individual debt, not a corporate leveraged buyout.
I do love a good debate, and am open-minded to being corrected. Did I make any mistakes in my argument? Do you see a benefit to an individual taking on debt, specifically the debt discussed in the post, mortgage debt?
