Is There Such a Thing as Good Debt?

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Some say that debt is the gateway to your goals, others say it's a ball and chain that will drag you down... So who's right?
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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.
sources:
archive.boston.com/bostonglobe...
www.debt.org/advice/good-vs-b....
www.richdad.com/how-to-start-...
thecollegeinvestor.com/4726/u...
www.gpb.org/news/2011/07/24/t...
www.aplu.org/projects-and-ini....
Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Philip Olson, CFP® and Julia Lorenz-Olson
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Andrew Matthews
Images by: Shutterstock
Music by: APM

[@TwoCentsPBS]

Lots of Dave Ramsey fans here, so wanted to address a common refrain re: Dave's stance on mortgages. Many have pointed out that Dave teaches it's okay to get a mortgage if it's a 15-year fixed with 20% down. We knew this going into writing this episode, and wanted to provide some context. On Daveramsey.com, it reads, "If you’ve been following Dave for long, you know his favorite way to buy a home is the 100%-down plan-paying cash up front, no mortgage needed." We took this at face value, and that Dave's best and preferred way to buy a home is without debt -- hence why his critics take issue with it. www.daveramsey.com/blog/3-steps-to-pay-cash-for-home While it's true that Dave repeatedly advises people that can't pay cash for a home (virtually everyone) to get a mortgage, this is contradictory to his overall message of living 100% debt free. It comes across to many as confusing, essentially "You should buy a house with cash, all debt is bad. But if you HAVE to use a mortgage, then get a 15-year fixed with 20% down, and do it with the one debt company that advertises on our show". Critics of Dave have pointed out that paying for a house in cash is unrealistic for most. What we didn't have time to point out in the video is that feeling shame or guilt about compromising in getting a mortgage also isn't helpful. And for many people in most cities, 20% down on a 15-year mortgage (while keeping housing costs under 25% of your income) really isn't within reach either. Our point was simply to present popular critiques of Dave's anti-debt stance As always, thanks for your Two Cents, guys!

[@mrvy33]

I hear you, and I'm not picking on you. I think we would all like to purchase a home with cash, and I feel that's what Dave is saying, but he understands that it's not always possible. I appreciate your channel!

[@MrHarumakiSensei]

I haven't picked a side on the good/bad debt debate, but I would point out it's possible to get very cheap houses if you're willing to move anywhere in the world. Not even terrible places either, just some town where the population is dwindling and they're trying to encourage people to move there.

[@jiffyb333]

Good to know, thank you for clarifying.

[@Exachad]

@@mrvy33 No, most people don't want to purchase a house in cash. Home loans are extremely cheap in terms of interest. You can almost always make more mostly risk-free money using a diversified portfolio. Over 30 years, you'll almost certainly end up making a profit. There are also other reasons to not buy a house. Buying a house in cash means freezing a huge amount of your wealth. If you ever end up needing that wealth, I wish you the best of luck!

[@inaces1]

I follow Dave Ramsey and also read on Roberts book. I'll take the Dave way any day. Now apart from the need for a mortgage i think all other debt can be avoided. But I'd like to suggest a critical analysis of Dave s investment plan I think he drops the ball big time on that. I don't see how he's magic mutual founds combo beets the market.

[@shapikai6431]

Living on Earth is expensive, but you do get a free trip around the sun.

[@stevenshar1233]

*whispers* we're generationally trapped in the gravity prison of this planet. In order to leave the prison we gotta pay millions in rocket fuel to leave Earth's gravitational prison. Even then, you're still in Earth's gravitational influence even in space.

[@LA-rp5uy]

You’re not wrong.

[@elijahdage5523]

I'm wasting my life taking all these yearlong trips around the sun.

[@Thebigbiscuito]

😂 love this!

[@brandontea3815]

Oh my gawd you are right

[@needlequill]

I took a personal loan to finance a gaming internet cafe. It was doing great the first year, but then the PCs got old and competition increased and I didn't get as much money from the business. Now with covid it's closed altogether, but I still have to pay the loan. I should have paid down the loan first and also saved finances for renovations. But I was greedy and took out all the money from the business to spend more. Now I work full-time and have to pay down the loan that isn't benefiting me at all. It was good debt at the beginning, but my greed and stupidity made it bad. Just a lesson for you, guys and gals

[@topcomment3816]

That’s like telling me to be careful with driving a car because you got a DUI. Your irresponsible use has no bearing on my responsible use. Gaming Internet cafe? Only take out debt on something with a proven track record.

[@needlequill]

@@topcomment3816 well it did provide great returns in the beginning. The cashflows could have repayed the loan and then - the upgrade. I dunno if your business experience is better than mine, but this is for people who are only thinking about starting a business

[@aracelimalone1167]

Ugh 😩 I did the same with my business in regards to a loan. Took out a 15k loan. I wanted to go big on purchasing as many quantities for fitness apparel business only to end up selling very few and now having to pay off the rest of the 10k with my fulltime job. My advice is always start off small and don’t get a loan in the beginning.

[@sampetrie340]

There were other factors besides greed and stupidity. A lot of very smart people got wiped out by the coronavirus, and by changing technology. Glad you have a job to fall back on. If you ever decide to go back into some type of business, you will be a wiser entrepreneur.

[@aracelisaucedo8711]

I appreciate your honesty, I have also had bad business experiences in the past. I learned from my mistakes and am now pretty comfortable. I think your ability to recognize how you could improve will lead you to greater success.

[@eliopalombi]

This might be THE MOST underrated channel on KZbin at the moment.

[@quincy061]

That's the truth!!!

[@elimonjarasmartinez4424]

Facts!

[@quahntasy]

Its not underrated, i mean everyone knows about this channel

[@eliopalombi]

Quahntasy - Animating Universe it has 381k subscribers, how is that ‘everyone’

[@quahntasy]

@@eliopalombi 381k very active subscribers, unlike the dead weight in other channels, look at the views they are amassing

[@rubdulbah3201]

I like how this channel introduces supposed financial experts such as Dave Ramsey and Robert Kiyosaki, but also qualifies information about them by giving common criticisms of both authors. It really does promote a holistic view on the subject of finances.

[@RealMelaniaTrump]

This is like Play School tv show for adults. Love it.

[@TwoCentsPBS]

Haha, I'll take it!

[@joyfrancowilson2681]

Basically, nobody truly grown up.

[@pyromcr]

It’s patronizing as hell

[@Entrailss]

It’s designed in a way to address multiple audiences. Excellent job.

[@tiffariff]

@@pyromcr I agree I dislike them but the content is good for a kid who just moved out like me. It's designed to be taught even to kids, but I think even high schoolers dislike the tone. I don't think middle schools should be nearly as worried about this stuff yet since they can't work yet. The constant *knowing look* and the slow speech Pace with the over emphasis- makes it out like they're trying to teach toddlers. Given I am an adult, financial toddler, but also I'm adult who can be taught like an adult. Although if my physics 2 and calc 3 professors acted this way and it made them this clear, they'd be my favorite teachers. I deserved to be patronized in physics- I don't fucking get it and it shamelessly slaps me in the face with every problem I get lost on. Teach it to me like a toddler please.

[@woahk3305]

Imagine how that first debt conversation went. Guy 1: "You owe me money." Guy 2: "What's money?"

[@Linda-bj3bb]

It's more likely that. Guy 1: "You owe me a chicken." Guy 2: "My chicken died of starvation."

[@samaraisnt]

You owe me grains." --the crops are dead. "You still owe me grains." *ima write this down so everyone knows.*

[@talknight2]

You owe me 10 sheqels of barley, my dude

[@squirrel8296]

What I've done since I turned 18 was basically use my credit cards like a debit card. That way I'm not spending more than I have, still making the purchases I otherwise would have (even if I used cash or a check) and I'm getting the rewards and other benefits of using a credit card. I don't think this way works for everyone, but I think it can work for a lot of people. This has made my credit rating skyrocket. Plus this way when I have to get a loan later down the road for say a mortgage or have my credit run either as part of getting a new job or establishing a billing account (utilities or cell phone mainly) I get a much better deal without having to give them extra money up front.

[@huskiefan06]

The majority of people who use credit cards carry a monthly balance. This is why Ramsey doesn't recommend using them.

[@PracticalPersonalFinance]

That, and the fact that you will tend to spend more if you use a credit card than if you use a debit card or cash.

[@Brooklyn100NY]

This is because a majority of people aren't financially literate

[@josephhartline8638]

@Apollo Mercier Disney has literally spent over $1 Billion to make "magic wrist bands" so anyone staying at their parks can charge it to their room. You always spend more when you don't see the money.

[@perotal]

@@josephhartline8638 it does not address his question/point though

[@roguedogx]

It's taken me forever to get mine paid down. And before covid hit, I was soooooo close. But now I'm likely to backslide again.

[@davidliang913]

If you have a plan for the money, a plan for repayment, and a plan to deal with it if something goes wrong. But that might be too much to ask.

[@EmperorZelos]

People getting a basic budget is too much to ask. I try to teach my students "Round up for expenses, round down for incomes, if it works out then, you're in the green"

[@TheArtofKAS]

Honestly that should be the minimum

[@TwoCentsPBS]

@@EmperorZelos Excellent advice -- your students are lucky!

[@EmperorZelos]

@@TwoCentsPBS Thank you, it is what I've used my entire life since I was 15 :) Rounding down my income to the reasonable amount, like the 100s. then do the same for all expenses, a bill that lies around 8.9 each month? Assume 10 bucks a month cause things are bad. In the end if it breaks even, I still have money left over.

[@EmperorZelos]

@@TwoCentsPBS Thank youy, I made a proper comment if you want to do anything with it that you like :)

[@sampetrie340]

The concept of “good debt” assumes that you can perfectly predict the outcomes of your choices ahead of time (hint, you can’t). Student loans to pay for a lucrative degree SOUNDS good... unless the economy tanks or you have medical issues and can’t get a job. The house that you think can be rented out for $1300/month sits vacant because the towns major employer shuts down. “Good debt” is identical to “bad debt”. You can only tell it is good debt in hindsight.

[@PracticalPersonalFinance]

I agree with you about only being able to say something was good in hindsight. Great thoughts about the student debt and the bad job market!

[@sampetrie340]

Practical Personal Finance Thank you. My daughter graduated Summa Cum Laude and is currently living in our spare bedroom because she can’t find work after graduating in the current economy. So the unpredictability of career paths hits close to home for us.

[@Brooklyn100NY]

@@sampetrie340 I think student loan debt is a bad example of debt, because many students don't go into lucrative fields. An example of good debt would be when one has a mortgage on a rental property and the monthly rent exceeds mortgage payments.

[@joelman1989]

Debt always carries risk. Investing carries risk. You should understand the risks and your tolerance for them before engaging with something that carries those risks. Debt can’t be good or bad it’s just an instrument that can be used in specific circumstances to accelerate you growth or gain access to necessary funds you don’t have. But it should of course be used sparingly and wisely. Some student loans and some mortgage debt is fine. Credit card debt can be advantageous if paid at the end of the month before interest. I only use credit cards. I don’t have debt.

[@f.-j.j.5738]

Whatever how the economy tank, I as a physician, will always have a job and an income. People just need care.

[@gregcountryman8770]

Thank you Two Cents for giving answer that isn't one sided. Financial topics like this should always be subjective depending on one's individual financial lifestyle and habits.

[@TwoCentsPBS]

We try, thank you. Black & white advice has more broad appeal, but we are trying to teach the fact that so much of this depends on YOU!

[@terryeffinp]

I paid off all of my debts, close to 50k worth. It was hands down the best decision I ever made. I don't have to keep track of who I owe what and when, I don't have to remind myself to stop by the credit union each month to pay on my truck. And all of that cash that was going out in payments is available to do whatever it is that I need to do or want to do. It is nice. I could not recommend it enough.

[@silverlina]

Julia's face when Phillip was explain good and bad debt 🤣 #priceless

[@alexmcclay5803]

God and she is so pretty

[@darthblob10]

That made me laugh out load. Needs to be turned into a gif!

[@dangerousnigga7023]

@@alexmcclay5803 gay simp

[@JohnnyJackson746]

Next up good cancer and bad cancer

[@PiXimperfect]

Love this video, not just because it's high on useful information, but most importantly, it's unbiased and asks you to make your own decisions.

[@cesaraguilar593]

Oh hi, good to see you here

[@killertigergaming6762]

It seems a lil bit biased in some videos but okay

[@lauromartinez8948]

They mischaracterized Ramsey on Mortgage debt and ignore his emergency fund philosophy so …

[@patrickquinn8079]

Dave Ramsey isn't really anti-mortgage. That is like the only debt he is okay with. He always says put 20% down and get at 15-year mortgage. The reason he advertises churchil for mortgages is because they don't require a credit score and look more closely at other indicators of being a good borrower. Of course, he says if you can buy a house outright then it is always optimal

[@28goldenboy]

Correct, also remember that he strongly recommends that your mortgage, insurance, and property taxes are no more than 25% of your after-tax income.

[@andycrabbe100]

Exactly! I love 2cents but they didn't do their research on Dave Ramsey, they say debt is unavoidable for some people due to car breakdowns, accidents etc. but one of the 1st things Dave R teaches is to build a rainy day fund for these occurrences and avoid debt

[@rachel_sj]

I’m not a fan of his advice on student loan debt. Long gone are the days when people can pay for tuition with a part time or summer job. To have him discourage higher education outright is foolish when our workplace and corporate world won’t invest in their workforce like they used to and unions are nonexistent...

[@risxy]

And taking a 15 year loan fundamentally misunderstands the point of leverage, which is something that rich people understand. Ramsey is good for people who have no desire to build their wealth in any real way but look to stay away from debt solely.

[@cnnnpc4351]

Buying a house is a bad investment for the average person

[@jmonty1595]

5:42 "Answering this question isn't usually solved by running the numbers." Aww, so no Run the Numbers section. Those are typically my favorite parts of these videos. In all seriousness, keep up the great work! I recently completed grad school and your content has been really helpful for preparing me for the real world! :D

[@TwoCentsPBS]

Yeah, haven't done that section in a while. We have some more down the line, promise!

[@coniccinoc]

lol, show me a young person who enjoys watching wealth planning videos and I will so you a probably future decamillionaire. To quote Mr. David Ramsey, "live like no one else so later you can live and give like no one else".

[@waflletoast11]

My Favourite Finance KZbin Channels:(in no order) Robert Kiyosaki(Rich Dad Mindset) Graham Stephan(Real Estate) Two Cents(Personal Financing) Dave Ramsey(Debt Free Living) Minority Mindset(Stock Market Finance) Kevin O Leary(Business Managment) hope this helps newcomers!!!!

[@Brooklyn100NY]

Thank you I was looking for more finance channels

[@EddySan25]

And BeatTheBush for early retirement 😄 Also, Graham Stephan is the man!

[@theshocktart]

You sir have good taste.

[@sor3999]

I've dropped all of those channels besides Two Cents and one other. And Kiyosaki is hella sketch. Stay far away.

[@whadayadoin3300]

No Meet Kevin?

[@zinebibanez8440]

I am in Ramsey' corner. Buying a house up front is the best option that many just do not have; therefore the second best option is buying the cheapest, half decent house on the market and taking on as little debt as you can. Having the peace of mind of being debt free or with little debt is going to give you a better night sleep than the best bed bought with borrowed money.

[@blademahfudz575]

agreed

[@Je.rone_]

Good and bad are probably overly simplistic way of looking at it... but i look at debt life fire... it can warm your house in the winter or it can burn it down

[@28goldenboy]

Excellent analogy. Btw, you and I have the same recommended videos, I always see you commenting on the videos I watch! Hahah

[@PracticalPersonalFinance]

I like this analogy a lot!!

[@coffeestainedwreck]

And just like fire consumes wood you could otherwise be using to build your house, debt also eats away at your future earnings. Really like this analogy!

[@TwoCentsPBS]

Good stuff! Agreed!

[@Je.rone_]

@@28goldenboy 😅must watch a lot of financial videos

[@pallasathena1555]

Awe man when you said “Robert kiyosaki in this corner” I was like there’s only one other guy it could be in the other corner. 👴🏻=💪💵

[@TwoCentsPBS]

LOL -- tipped our hand a little there :)

[@pallasathena1555]

Two Cents Ramsey solutions - the only place I’d go for plastic surgery

[@godofwar4276]

Kiyosaki is a fraud. The hosts don't seem to have gotten deeper than his first book.

[@robyhartland852]

@@godofwar4276 Meh. Maybe. Maybe not. Doesn’t mean the arguments aren’t legit.

[@joaomanuelaraujo250]

What the Greek Government asks itself everyday

[@SS-wi4tm]

Government debt is not the same as individual debt.

[@caorusso4926]

Goverment debt is always good. See the MMT

[@pinnedcianarens6218]

I'm a complete beginner and the crypto market has recently been confusing to me

[@pinnedcianarens6218]

How can I earn consistently in the crypto Market?

[@whapp4677]

Try investing in chip blue stocks like Walmart, Disney, coca cola, also try Bitcoin, ethereum, stellar etc and try earning dividends.

[@coniccinoc]

I followed Dave Ramsey's steps, mostly anyways, and have had excellent results. Having no debt and an emergency fund gave me comfort when covid struck.

[@FinancewithArjun]

All debt is psychologically bad. Some debt is mathematically good (for eg. debt with lower interest rate vs. average return rate of the stock market)

[@vibeymonk]

You guys like the Indian version of two cents?🧐

[@chaiyamahaiya2830]

Vibey Monk yup powered by curry

[@alexc5369]

The average rate of return is historical, to use that figure in comparing with your home loan is speculative. Its not apples to apples.

[@robyhartland852]

That’s not true. Some people have zero issue with being in vast amounts of debt. Especially if they have the assets to cover the downside.

[@TheMrFabian1]

Despite having been to Business School, I love to come here to learn. Great Channel!

[@andreipuscalarga9996]

Debt is like wine... Have a little and with good measure and it will help you like a glass of a wine after lunch, but if you have 3 bottles it will give you a hell of a headache.

[@reason7123]

If every high school student had to sit through a playlist of Two Cents videos before graduation, the US economy and general standard of living would be off the charts in 1 generation.

[@KevinSheppard]

Also, your honesty about your own situations with debt made me feel like 10x less of a screw up than I thought I was. My problems aren't as unique as I thought...

[@Sovnarkom]

lol a Robert Kiyosaki vs Dave Ramsey debate would be hilarious.

[@pineapplesoda]

There should totally be an Epic Rap Battle featuring them!

[@TheKillerDeer]

@@pineapplesoda you read my mind!

[@michaewelina7983]

How to scam you form your money in two different approaches, yes that would be very interesting.

[@pizzamagee6220]

It would be one sided since Robert and his company just filed for bankruptcy... again.

[@huskiefan06]

You've misrepresented Ramsey's position on primary home mortgages. He's always taught 15 yr fixed rate mortgage with at least 20% down (where payment is no more than 25% of take-home pay). He's also always taught this can be done only after you're completely out of debt and have a 3-6 month of expenses emergency fund. 3 months for dual income households, 6 months for single income households. He doesn't recommend borrowing on investment homes because of the risk.

[@PracticalPersonalFinance]

This is correct. Dave is cool with mortgages under these conditions.

[@guvnabeatz9884]

I never usually comment even though I'm subbed to the channel and I have to say, in my late 20's you have helped me reshape my finances ever since the first video dropped and I probably subbed very early on. Thankyou guys for helping this guy who defaulted in his installments become completely debt free with a positive cash flow. Not that I wasn't diligent before but alcohol abuse threw me off the rocker no matter how hard I tried to balance. Thankyou for making me fall in love with money all over again.

[@Navostar1]

I ❤️ the both of you! Thanks for sharing solid and sound advice 🙌🏾

[@the_bush_family]

Love this position! Go the Dave Ramsey route long enough that you truly know yourself and your habits...then begin to use debt wisely for business and further financial growth.

[@PracticalPersonalFinance]

I agree. Once you understand the risks inherent with using a credit card or a business loan, you're much better equipped to use those types of debts.

[@TwoCentsPBS]

Thank you! That's what we were going for :)

[@aliasgharkhoyee8911]

Good way to think about it - most people don't have the time or inclination (or perhaps skills) to keep close track of their finances, so the no-debt rule of thumb saves them. Once you have got rid of all your debt, are financially stable and comfortable, and have a a good understanding of all your financial options - maybe then debt can become an option to think about.

[@brandonmccorkle8944]

Hold up, The end of the video didn't tell me what to discuss in the comment section so I don't know what to put here :(

[@BlackJesus8463]

leverage

[@JK-ww8dn]

Please don't stop making these videos guys this channel is fantastic.

[@sabrinasuarezarrieta5182]

I really love all your videos, you give such good and kind approaches to subjects, you are one of the best channels of youtube

[@simmone5098]

I love this take! Too often I find views on debt polarizing and that just makes us feel guilty for not measuring up to one standard or another. It really does boil down to Each individual’s needs and situation.

[@BensonGitau]

Most people discourage debt, but definitely, there's good debt and bad debt. I once financed a car for 2.5% and used the cash I was going to buy the car with to deposit in a 5% yielding offshore account. Now, that's good debt. Anyways, I also teach personal finance and you guys are always an inspiration. Keep it up!

[@RealRiders]

Sounds like you have a cushion to absorb highly volatile currency markets. Imagine you lose money and you are left with no savings and a car payment.

[@TheArtofKAS]

Much agreed my friend

[@BensonGitau]

Francisco Gallardo that’s was a couple years ago. The only debt I have at the moment is a mortgage.

[@BensonGitau]

The Art of KAS 💪

[@PracticalPersonalFinance]

Unless that 5% return was guaranteed and there was no chance of losing any money, that sounds risky!

[@calebpeters3857]

In love with this channel ! 🤍 Thank you for the information. great value

[@BlueFlyer83]

Huge Dave Ramsey fan here, but my wife and I use credit cards with no balance AND choose a 30 yr mortgage because it give us some financial flexibility.

[@pedroportillo1585]

Surprisingly, I find that Dave Ramsey and Chelsea Fagan (with a sprinkle of Two Cents and Minority Mindset) can both add to each other when you take away ideology and just focus on the actual advice they both give.

[@jefferyfelix1416]

I use to watch all of them. I honestly stopped paying attention to Dave Ramsey. When it boils down to it debt is an investment and requires an individual approach. I’m taking on student debt right now because I need to get in a career not a job before I’m too old to do so and have a retirement. I’m going into health care as a respiratory therapist which pre Corona virus was a growing field because of an aging population. I ran the numbers and even making the low end of a starting salary I can pay this debt off and reap the benefits of having a job with retirement benefits and health insurance. Non of which I’ve had on my own on over 15 years.

[@michellem9444]

I think the most important note in this video is to know yourself. Personally, I have gotten into trouble with credit cards before and I know I can't handle the temptation to just "put it on the card" during tight months. So for me, it's easier to do without the credit cards. During tight months, I have to get creative and cut my spending, but I'm always happier that I didn't create major debt out of minor inconveniences.

[@VIDEOHEREBOB]

So, so much of going into bad debt is mental. So many people fail to realize that companies of all kinds WANT YOU to be in debt. It's in their best interest to appeal to your innermost desires to KEEP YOU in debt. Companies WANT YOU not paying, but owing.

[@GizmoAndKiwi]

A well balanced video as one can expect from you guys! When I was still in university I could only focus on the day my debt would be payed off and I wanted it to happen as soon as possible. Being a first generation student with a single mom in huge debt it was the only option. But since then my view shifted and now I have a similar approach - not everything's bad when it comes to debt.

[@Amar-pu3ph]

This channel is hugely underrated. Hatsoff to you guys for giving simple, effective and free lessons on financial education when there are paid courses which are hard to understand. Liked, Subscribed and shared Keep going.

[@byron2521]

Living in Covib - 19 here. Almost had most debt paid off back in March 2020. June 2020...... State and Fed. gov. owe me over 2000 in unemployment.... they haven't paid. Maxing out credit cards again just to survive. Can I ask the gov. for late fees for unpaid bills and late fees in July? Yeah.... bet that's not going to fly. There is a myth perpetuated about credit card debt. A lot of upper middle-class and wealthy people think lower wage people are just running around charging everything..... eating out, cloths, vacations, etc. My credit cards get charged to things like...... car repairs so I can keep a job, medical bills, and recently paying for bills during Coronavirus. I have never bought a TV, car, etc. on any payment plan or anything. P.S. I used to listen to Dave Ramsey. I quit because I got tired of listening to people calling in crying because they couldn't pay their bills making 6 figure salaries. If you make a 6 figure salary and cannot pay your bills..... You are a moron!

[@anniesshenanigans3815]

AGREED!! I follow the principles and watch a rant rerun here and there if I get back into old habits. I am not a member of the fb page either because of the snobbish group on there. You say ass instead of A$$ and your comment gets deleted.

[@jasmineyoungblood]

I love you guys ❤️. Thank goodness I found your channel in college. I appreciate all of your content. Thank you.

[@tyler6003]

I just discovered this channel and LOVE the COMMON SENSE approaches to money, no gimmicks, no flash just balanced information with no alterior motive

[@avrillavigne4635]

Successful people don't become that way overnight.what most people see at a glance-wealth,a great career,purpose- is the result of hardwork and hustle over time.

[@niavardaios6026]

You're right ma

[@niavardaios6026]

Thanks for introducing me to expert mr smith greenwoods of financial education

[@demilovato8799]

Most people don't invest due to ignorance

[@demilovato8799]

People are scared of investing because of the high rate of scam in the business

[@demilovato8799]

There are scammers but real brokers are out there for investors

[@lbalda1]

This is the best youtube channel. They should show it in high schools.

[@tsumibatsuegoist]

Love how you explain it! 👍

[@shawnpheng7609]

You guys are genius, learning alot from 2 cent, already like and subscribe, you two are the best among the financial education video I've watched on KZbin, wish you guys the best.

[@ameliarolf4041]

Literally just dipped into my carmine red watercolor when they gave that shoutout. Spooky.

[@KaironQD]

I blame my parents.

[@DallasMay]

Just once, I wish just one of the many "Bible-believing-our-country-was-founded-on-Christian-values" politicians would run on the promise of passing legislation instituting a Jubilee year and outlawing usury.

[@ryanhunley190]

Completely agree!

[@theAppleWizz]

This country was not founded with the Bible in mind actually the opposite this is why we have freedom of religion!!!!

[@DallasMay]

@Austin Martín Hernández I'm both amazed and not amazed at at that commentors would respond to me in obvious absolute ignorance and not even bother to Google either of those two words before commenting.

[@moderndilettante6896]

@@DallasMay I've seen laws passed in the last few years on Usury, (predatory lending and such) even seen some people go to jail because of this practice. Sad its not completely illegal but sooner or later people will get tired and either laws are passed or guillotines will come out. I don't know about Jubilee year but would like to see a 10 year revision of inmates and debts and see how things can be worked out for the marginalized.

[@ling636]

That is some Commie shit

[@nate6859]

you guys make it so easy to understand. Thanks alot

[@matildamaher2650]

Thank you, we need more of your episodes.

[@adamv126]

This is easily one of your best episodes.

[@MephLeo]

Short answer: no. Long answer: OF COURSE NOT, HOW CAN YOU EVEN FALL FOR THAT FALLACIOUS LOGIC? The name you are looking for is INVESTMENT COST. Debt is only worth and reasonable if it is both: a) absolutely necessary; and, b) made with the intent of increasing your net-worth through a carefully designed plan. So, no, definitively there's no such a thing as a good debt: Debt at best is a necessary evil that has to be managed responsibly and erased as soon as possible.

[@Brooklyn100NY]

You can save thousands off of credit card rewards if you never carry a balance.

[@caorusso4926]

Based

[@MephLeo]

@@Brooklyn100NY Yeah, but then again that's not what we are basically talking about when we say debt. If you never spend more than you make and just use your credit card to get those points, without carrying out a balance forward to the next month, you are not paying any interest, which means you have no cost attached to the money you took. The costs you would face are the standard fees attached to your credit card, if it has any, that's what you have to compare the winnings you make with those points to. But let's say you have a business whose cash-flow varies according to the season, say, an ice-cream parlor. Let's say it has very predictable periods of low movement during the winter and of high movement during the summer. During the winter you are not able to break even, you have to go on debt to keep it open, but during the summer you know you can make more than enough money to take a good profit even considering the payment of the debt you have to take on the winter. That's a classic scenario to discuss debt. Even though the logic isn't any different from what you are saying, there can actually be a substantial amount of interest involved, and there's also uncertainty to be considered. For instance, this year your ice-cream parlor would not turn out any profit even during your peak season, meaning you would have to accumulate even more debt because of some unpredictable factor. So, not having previous debts accumulated would be paramount to making through such rough times, together with having some savings set aside specifically to deal with this kind of factor.

[@Brooklyn100NY]

@@MephLeo I get what you mean with the business loan but the more common example of good debt Is real estate. Many people have become millionaires through investing in real estate with a mortgage and renting or selling the property.

[@MephLeo]

@@Brooklyn100NY You just saw in the video an example of why you can't call it good debt. And I'm not advocating for the abstinence of loans, if I can call it that. I'm saying that debt is a cost that can quickly spiral out of control even if you had previously a good plan to deal with it, because of even minor unpredictable events. We should see debt for what it is, not sugarcoat it. It's a cost that puts burden on your income and pressures your net-worth, even when well managed. And costs are things you want to cut whenever you can. The term "good debt" is an oxymoron. It's like calling "good flu" a mild flu just because it wasn't as severe as it could have been.

[@kellyknuth1247]

Love this channel and random trivia i learned.

[@matthewjones5705]

I am just so happy to have found this channel , truly. Thanks.

[@tedre191]

First, what's your household income?

[@GeneralChangOfDanang]

Sell the car.

[@EddySan25]

You need to get a second job delivering pizzas...

[@betruetoyourself7162]

Beans and rice

[@CarrotConsumer]

3.50

[@alexderrickson3576]

“Sell so much the kids think their next” 😂😂😂 my favorite Dave Ramsey quote of all time

[@jisson57]

I see a lot of people saying this, but I thought I'd chime in. I love Two Cents but the bit about Dave Ramsey being "anti-mortgage" is misrepresented. Dave Ramsey recommends a 15-year fixed rate conventional mortgage with a 20% down payment. He says this time and time again on his show. Then once you're debt-free (everything except your mortgage) Dave recommends throwing extra money at your mortgage to get it paid off ASAP. He recommends Churchill Mortgage because they offer manual underwriting which allows you to get a home loan without a credit score - aka no debt. I still love ya to death Two Cents, but as a huge Dave fan, I had to chime in on this one 🙋‍♀️

[@TwoCentsPBS]

Hey Jane! We're quite familiar with this nuance -- I (Philip) used to be an endorsed Financial Advisor for Dave's company (ELP) and knowing every in and out of his teaching was essential. I'd push back a little bit, but your point is well taken. I've heard Dave say on numerous occasions that "the best way to buy a home is with cash" -- aka, a mortgage is not best. But I think he's softened that stance more and more because of the Churchill advertising dollars (they're the only debt-company that advertises with him), and because it's such a wildly unpopular and unfeasible stance to be 100% anti-mortgage in all situations. Even this compromise is pretty unrealistic, though. To follow Dave's guidance would mean a 15-year, fixed mortgage with 20% down and a housing cost of no more than 25% of your income. That's a VERY tall order, and unattainable for most people in most cities. I theorize that this is a compromise between being sponsored by Churchill and generally trying to urge people away from debt as much as possible, but it comes across as confusing and conflicted (to me at least).

[@benvail6395]

Two Cents do you really think Dave wouldn’t offer his advice on mortgages if he didn’t have that advertiser? You’re essentially calling him a sell out here... a pretty strong accusation. He *does* have financial incentive, but does that equate to him not having integrity with his values? That’s subjective, and I’d say no. Your comment reads more like a disgruntled former ELP than a balanced opinion.

[@stermichael4874]

@@benvail6395 This… But @two cents I have been following Dave the last 6-7 years. I hear him say ALL debt is bad, but basically having a mortgage is acceptable. Of course ideally paying cash for a house would be great, but as you said thats not realistic. He understands this which is why he lets people know having a mortgage within your means is acceptable because it can be better financially than renting. Never have I felt he’s played both sides and lets be honest he could drop churchill and be perfectly fine. The fact that they dont require a credit score shows his listeners buying a house can be done without ever going into debt. Anyways… LOVE THIS CHANNEL

[@erdhyernando]

Your videos should be watched at every school in the world PERIOD

[@leftyla]

Excellent topic!! I've never really thought of "Good" debts before. This is really a lightbulb moment.

[@suleiman1520]

I think debt is risk at the end of the day... You have to assess the potential rewards of taking it on. I think people need more education on how to do that assessment.

[@michaellavy3269]

At first I thought you were going to talk about investing with margins

[@TwoCentsPBS]

I mean, buying a house with a mortgage is margin investing, at least in essence.

[@MilenaSimsic]

Best good debt I can think of is real estate investing. Investors use a technique commonly known as "leveraging." If you buy a good property, your tenants are paying off your mortgage and other expenses. Plus you get some extra cash flow on top of that. If you leverage your money and get larger mortgages, you can obtain more of these cash-generating properties than if you were to buy one with full cash. But even then, there's a fine balance and you have to be careful to not over-leverage. A lot of financial advice channels are very black and white when it comes to debt. So I love that this channel delves deeper into this topic.

[@arttiz01]

Awesome!! Thanks!! Lovely and informative video

[@mrvy33]

Ramsey doesn't teach to not take a mortgage. He teaches to take a 15 year fixed interest loan at no more than 25% of your take-home pay.

[@mylifeisamememylifeispathe3140]

Almost impossible right now

[@elijahdage5523]

@@mylifeisamememylifeispathe3140 funny meme guy haha

[@PracticalPersonalFinance]

I was looking for this comment! Surprised they called Dave out on mortgages. He's alright with them as long as they follow those rules!

[@mrvy33]

@@PracticalPersonalFinance Agreed! It just felt a little misleading. I'm glad they clarified.

[@gsogymrat]

So with the median US household income at about $66,000, then taking out taxes and using 25% of the remaining income, the average American household should be spending about $1000 a month on a mortgage. With 20% down at current interest rates and a 15-year mortgage, the average American family can afford, approximately, a $175,000 home. This is unrealistic in a major metropolitan area but definitely possible in smaller cities and rural areas. The median home price where I live in Greensboro, NC is $148,500, where nationally it's $184,700.

[@anonymousme4583]

0:52 the reason I love you guys

[@FastBearChicago]

I love this so much. Thanks you guys!

[@williamjasmine7693]

Love watching this channel, Very informative yet explained i na very light way.

[@dissonanceparadiddle]

Cash is great.... Until inflation ruins it.

[@MephLeo]

That's why you shouldn't keep your savings under your mattress. Debt, on the other hand, is awful because you have to pay it with that same cash that is constantly depreciating and because you'll never find an interest rate that is lower than the inflation rate. Soak yourself in debt and you are losing wealth twice as fast.

[@cnnnpc4351]

@@MephLeo Yes you can. There are 0% credit cards and auto loans.

[@takedashingjen4402]

@@cnnnpc4351 if the auto loan is 0% you are paying the missing % with the price XD

[@MephLeo]

@@cnnnpc4351 No such a thing as a free lunch. Your costs are hidden somewhere you are not looking.

[@maltereese8800]

Still rooting for a crossover of “two cents” and “Dave Ramsey”.

[@anthonymartell9880]

They're too nice he would bull over them

[@anthonymartell9880]

The Ramsey fans here know that sooner or later he would start telling or screaming

[@PracticalPersonalFinance]

I'd watch that!!

[@TwoCentsPBS]

Haha, we like Dave in general, but our philosophies diverge in several areas. He and his "Ramsey Personalities" have one strong thread among them: consistency of position. I regret we're probably not aligned enough and we'd eventually descend into a shouting match. And as Anthony correctly points out, we're too nice and he'd bull right over us :)

[@sitrakamatthieu]

Guys ...you sounds like kind and warm earthed parents !!!! Love you from France ! bravo et continuez sur votre lancée !!!

[@backporcher8814]

saw you at mighty fine! love yalls content!

[@nekto34]

Somewhere in Tennessee, Dave Ramsey is screaming

[@PracticalPersonalFinance]

I think I can hear him!! LOL

[@cbcsucks2205]

Why would I not take a mortgage on my house and invest the rest of my money in order to spread out my exposure

[@teatowel11]

This is a smart option unless you live somewhere with full recourse like I do.

[@alexc5369]

Do you mean to say you'll borrow against your paid off house and invest elsewhere in order to spread your risk? If the case, that would increase your risk

[@cbcsucks2205]

@@alexc5369 why put down more than 20% when you can invest the rest and beat your mortgage rate. I've made 15% in the last five years (including the Covid crash) my variable mortgage has been less than 4%. Have you ever heard of The Smith Manoeuvre? This where you invest your HELOC in equity stocks or ETFs. The interest on your HELOC becomes tax deductible as an investment loan. Apparently you can actually lose 2% on your spread and still profit via taxes. Personally seems like a lot of babysitting.

[@cbcsucks2205]

@@teatowel11 what is full recourse (I'm Canadian eh)

[@cbcsucks2205]

@@alexc5369 having all your equity tied in one market (your house) is the highest risk level. Borrowing against your house to invest in a diverse portfolio actually lowers your risk as not all eggs in one basket. Home ownership is the riskiest 'investment' ever.

[@DailyProg]

You two are doing great. Amazing video as always

[@ianvirgilumengan2234]

I love how simple you guys make things for us. Thanks, Two Cents. 😁

[@fft2020]

Listen to her sparky :-) You still have the cutest mustache of the internet

[@tigreytigrey8537]

Sparky deez nutz

[@martinrosekane6707]

Great video. i dont think there is anything as a good debt because debt is debt meaning you owe! No doubt, this year has been so jumpy for the everything in general including cryptocurrency asset and there is always an avenue for Correction and the leading asset which seems to be bitcoin is not left out of this short term Correction.The crypto market is always round the clock.i don't kick against holding but it is important you find a working pattern/daily signals in order to grow the little you hold.Although the leading crypto which is bitcoin is selling at around 9,13Ousd and thanks to recent suggestions from top experts like Hector giving clear signs to rally towards 1O,OOOusd.

[@tollinimila6102]

On the internet i also noticed a lot of people talking about this hector daily trade signals, now i am convinced with what i am up to...How do i get to contact him thanks.

[@allisonkanejame1450]

I told my partner that he is indeed the best now with his guidance and magical daily signals..

[@sabrinamorris2217]

For sure i will always rate Hector Whitehead’s strategy 85/100, I haven't lost a dime with this program. less risk unlike holding.

[@samadrosestar1986]

This information is really insightful, i might consider trading than just holding

[@belindasmithjames3107]

The only guaranteed way to make profit from trading is with the help of an expert, that's the fact.

[@Thegreekgeekss]

My father told me to never take a loan or be in dept. He visualized it to me like "If your blanket doesn't cover your whole body when it's cold, just change posture and fit in it." And that's what I do and I'm living dept free till today. And with the right choices and hard work, money finally comes to you.

[@hamadeliterank]

That's actually a pretty good analogy. Thanks man!

[@Thegreekgeekss]

@@hamadeliterank I hope you'll live a dept free life too man! 😀

[@mariannelim8064]

I love your channel so much. You guys are so witty!

[@3of11]

This and the “Invest more Vs pay off your house early” seem to really bring out the arguments. Personal finance is personal and one’s debt tolerance and risk tolerance need to be accounted for. I lean heavily on the not having debt side though I don’t see having a CC and paying it off WEEKLY (almost like a debit card) as “having debt” either. Again on this subject some people can control their spending on plastic some cannot

[@LG123ABC]

I pay my CC off DAILY. What I mean is that every morning I log onto my CC account website to see if I have a balance. If I do, then I select the "Pay Current Balance" option (now matter how large or small the balance is) and set up an electronic payment directly from my bank account. This process works every day except Sunday so I'm kind of treating my CC as a debit card with a 24-hour delay.

[@brandobond]

Those are sub optimal ways to use a credit card. I pay mine monthly and set it to automatically pay on the last possible day (three business days before the balance is due). That gives my money the longest possible time to sit in my savings account collecting interest.

[@CueBeanKa]

Seriously why bother paying it daily? That's just creating work for the sake of it. Just set up an auto pay for the full statement balance and be done with it. If you're spending within a budget you'll always have enough to pay it, and you'll never pay interest.

[@MaggieClarkSLC]

Agree!!

[@mjz187]

I'm more on the use debt if you can handle it. Let me give this as an example if Jeff the owner of amazon said he would sell you his business for 4 million dollars and it earned 150k per month after expenses but let's say you didn't have the money to buy it in cash so you take a business loan and the payment is 100k per month for a little over 3 years so now you're pocketing 50k per month now this may be a little extreme but a wise wealthy man once told me that. So why wouldn't you take that debt? Yes it might be risk that it won't be doing good in a few years but hopefully you could save some of that 50k a month income to spread your wings into other businesses.

[@ThaylorHarmor]

2:04 “...a student loan [to keep you in debt the rest of your life with a useless degree in Underwater Basket Weaving]...”

[@k_ay3469]

Thank you guys. This is enlightening!

[@Angell_Lee]

Yesterday at 27 years old of age, I am now DEBT FREE!!

[@La8ghost]

If anyone wants to know about a real-life example of good debt, you should check out Graham Stephen

[@ImReadyAyu]

Graham Stephens is the best example of leveraging good debt, but for the typical American, stick to paying off debt cause his strategies is so complex, rough to maintain, and hard to understand

[@pawsnotclaws2772]

I love graham

[@silverwolf2643]

The whole concept is not difficult, use borrowed money for smart investments. However Graham is up to his eyeballs in debt and will be repaying this his whole life. And he retains very little from his rental income, youtube is the only reason he is rich. People should not really strive for a position like his.

[@kurtlatchman]

Silver Wolf thank you!! Graham is nothing more than a KZbin millionaire. Granted, the guy is frugal, but listening to his videos is only making him richer and does little for you. Two Cents actually provides you with sensible real world advice. Coming from a guy who worked in investment banking for 3+ yrs and now at a real estate fund in NYC. Don’t need that to see that Graham is full of it..

[@silverwolf2643]

@@kurtlatchman I am finishing masters degree in Finance, Graham barely knows anything about real finance. He just knows all about real estate which in reality is part of alternative investment asset class. Yet he doesn't shut up nowadays about the stock market as if he knows what he is talking about. For uneducated people he seems like a god but educated people in Finance see what a moron he is. He gives the most basic generic (borderline stupid) advice up to date, savings accounts and invests in freaking expensive etfs giving below 2% dividend return and keeps talking about stupid appreciation which honestly doesn't mean anything in the context if a person doesn't plan to sell any of his financial assets ever. He has done well for himself but his approach is so far fetched it is crazy. He was actually priviledged since day 1 - he grew up in LA, makes a living by being a sleezy sales guy to extremely rich people. He begged people to push up his videos by liking them, his videos are riddled with ads, like neverending ads. I get it he does it for the money but this is just absurd. Talk about going to the extreme, he even got his girlfriend into this, they don't look weird but they have freaking 9 years age gap, I refuse to believe she wasn't drawn in at least a bit by his fame and financial status.

[@Maxxrevv]

If you borrow 10k from a bank and cant pay it back your in trouble. If you borrow 1 million dollars from the bank and cant pay it back the bank is in trouble.

[@hoopsmcgee8272]

Great advice. I've had conversations like this with lots of my friends and family. So long as you know what your debt is being used for, it can be really good for or awful.

[@sarjanasaham9453]

Always happy to see you both :D stay healthy Philip & Julia :)

[@mrnumpty42]

I’d love to know what they do otherwise. The husband says he is licensed, so that normally means for investments.

[@PracticalPersonalFinance]

I believe he is a CFP, or certified financial planner!

[@TwoCentsPBS]

@@PracticalPersonalFinance thanks for the shout out. Yes, I'm a CFP, and our little firm in Austin offers financial and investment advice, been doing it about 10 years.

This channel is too underrated..

[@user-yh3yq9it2s]

Just came across your videos. These are great life and finance skills to teach.

[@sarah3796]

thank you for this series

[@dexterne]

My "Good Debts" are any that cost less than the returns on my worst investment after inflation and tax writeoffs. I have NO debts that qualify as "Bad" where I carry a balance. Both Ramsey and Kiyosaki approaches have major issues.

[@elijahdage5523]

Thanks for that, Tim Dexter. I'm pretty sure that if you watched the rest of the video, you would understand that these are the two extremes, and that everyone should have a different view on debt depending on their background and personal experience. In other words, your view has serious issues.

[@huskiefan06]

That would mean you'd drain the equity of of your home and invest that whole amount in the stock market. It's not logical.

[@dexterne]

@@elijahdage5523 I watched the video, and have read books by both authors. I realize that they are polar opposites and my own philosophy is in the middle, more conservative than Kiyosaki and more aggressive than Ramsey. I never said my approach was for everyone. Where do you lie on that spectrum?

[@dexterne]

@@huskiefan06 I don't take it that extreme, fwiw I have 37% equity in my real estate holdings, and my Net Worth is 30% stocks, 28% Real Estate Equity, 27% bonds, 12% small business equity and 3% cash and equivalents. What are your numbers?

[@dexterne]

The annual returns on my most conservative investment averaged 5.85% over the last decade. (The rest returned more.) The cost of my highest interest debt after tax writeoffs and inflation are taken into consideration is 3.94%. (The rest cost me less.)

[@makesaveinvest1401]

Yeah!! No good debt exists!! But less bad debt exist!! lol!!

[@ferpleitez]

Good video guys, I think this is the only channel I ever comment on. What I like the most about you guys is how nice you guys are. Keep it up!

[@johncarlobalaoegtimbol6356]

My goodness the quality and depth of research in this show. That's to say nothing of the quality of the presentation