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      01-12-2009, 12:54 PM   #35
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Drives: 328xi
Join Date: Mar 2008
Location: Boston, MA

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Originally Posted by sf_loft View Post
You must fall into the same "financially challenged" category. There are 2 types of debt, good and bad. A mortgage is good as long as you didn't get sucked into the sub-prime mess and buying too much house. You are building equity even though you are paying interest, how else is the bank going to make money. You also get tax benefits for the property and mortgage interest you pay and get most of it back in tax returns.
You'd guess wrong.

My objection is to those terming credit cards as "bad." There's nothing inherently wrong with credit cards, yet those people who can't think rationally about their debts or responsibly about their usage blame the system instead of themselves. My credit cards have an APR of 5-7% with 1% cash back. If I can use my cash to get a better ROI on some other investment (admittedly not easy in this current financial environment), then why would I pay down the credit cards? Because I don't want those "evil" companies making interest money off me? Debt is debt, some of it has a higher cost than others, and the one that costs the most should be paid first.

And buying property isn't necessarily the best use of your housing dollar. Those tax breaks for mortgage interest usually only offset property taxes, insurance, and water and sewer bills. If values aren't increasing and the only equity you're gaining is the tiny percentage of your mortgage payment for the first few years, you're going to find yourself in a hole if you're not there for the long term.