What are the benefits of being debt free?
Had this discussion among friends. Some felt that since you can't take your possessions with you when you die, you might as well enjoy life to the fullest, even if that means being constantly in debt.
Of course, if you have a family that's another issue. You place your burden of debt onto them.
I'm torn since I've always strived to be debt free.
But what if you are? Does that afford you any special advantages in life, or just piece of mind that no one will ever threaten to take your home away?
Of course, if you have a family that's another issue. You place your burden of debt onto them.
I'm torn since I've always strived to be debt free.
But what if you are? Does that afford you any special advantages in life, or just piece of mind that no one will ever threaten to take your home away?
Comments
I think my sister and her husband have given up on getting out of debt. They're so far in the whole (over 30k) that they don't care anymore. They already own their house so they feel that they don't need good credit anymore. HELLO!
Thats terrible thinking. If you've dug yourself too deep a whole - STOP DIGGING!
Your quality of life isn't going to improve if you keep adding to your debt. Lets say you have a house and a car and loads of debt. You're going to have to keep working FOREVER. You'll never get out of the rat race. You're always going to be working to pay someone else. Forget about ever getting a bigger house, or a boat, or a vacation home. Sure you can get more credit cards to buy more computers or home stereos but forget about the really big ticket items.
And most importantly....RETIREMENT! If you don't get out of debt, I don't know how the heck you'd ever really retire. I'm sure there's a lot more reasons and I'm looking forward to what other people here have to say.
thats probably the best thing.
but can you truly be debt free?
Problems with debt will most likely arise when you are doing things like buying a house, financing a car, etc. The more debt you have, the more likely your contract terms for those activities will work against you / end up causing you a lot more debt / stress / etc.
As far as when you die, let's say you had 5 grand in credit card debt (more than a "moderate" amount IMO). Most likely that wouldn't affect your relatives, assuming you have a decent life insurance policy. Even a mediocre policy that has been built up over a decade or more, will pay out in excess of $20,000. Some of that is intended to pay funeral costs, but of course the recipients can use it to pay of debt as well.
Another common practice is to sell the person's car or other valuable belongings that perhaps the survivors don't need, and use that to pay down any debt. In short, you can't take it with you, so as long as your paid-for assets (including insurance) come close to equaling your debt, your family won't bear any great burdern.
Of course, if you are the only bread winner, your family will need that insurance pay out to live on for a few months while one or more of them can find work, so think twice before putting that X Serve render farm on the old credit card!
I think people live far beyond their means and sometimes you just have to downshift.
Pass on that new car when the current Volvo drives fine after 10 years
Pass on that new computer when your 8600/200 works fine for your needs.
Pass on that Krell amp when your Okyo meets your needs.
America promotes living in "Excess" ...happiness comes from breaking away from the Marketing leaches that infest Televison and corrupt your childs mind.
Happiness cannot be found in inanimate objects.
I assure you I am not the only non-debt proponant here. Fellowship is pretty good about the whole no debt thing from what I understand.
First let me state that not all debts are equal, nor is all time equal. There are several books out there that could give you a full understanding of the very basic points mentioned here.
In my view, there are really only three types of debt. Secured, consumer, and leveraged.
Secured is a debt that is backed by the full value of what is being purchased. This is your mortgage debt for example and it is often compounded at a slower rate. Your mortgage is compounded monthly. Some car loans can be considered secured and so are certain equipment loans.
Consumer is not backed by anything other than your intent to pay. Credit cards, store credit, and even some car loans are consumer because they sign bad terms. Since these loans are unsecured, the interest is much higher and is often compounded daily.
The last form of debt is leverage. Leverage is money borrowed to maximize return on an investment. The terms on leverage can vary widely.
I am not opposed to secured debt or leveraged debt in most cases. I am very opposed to consumer debt.
There are two other issues that people confuse and that is the difference between an asset and a liability and wants and needs.
The reason debt is bad and harms most people have to do with a couple of reasons. First a lot of people don?t know what an asset really is and will purchase liabilities thinking they are assets. Paying off liabilities keeps you from purchasing and gaining experience with assets.
The most common ?asset? that people think they own is their home. A home isn?t an asset for most people, it is a liability. The best definition of asset, in my opinion, comes from ?Rich Dad, Poor Dad.? An asset is something that puts money in your pocket. A liability takes money out. There are lots of folks that buy the biggest, nicest house they can afford on two incomes. Then when someone gets sick, their ?asset? is eating them alive. Likewise they likely bought more house than they ?need? and now that is limiting their ability to use money to purchase assets that put money in their pocket today.
So in this instance even though the debt is secured, it can be bad for numerous reasons. First it requires two incomes to maintain the home and since it is really a liability, it can eat them alive when a problem occurs. Secondly it takes away income that they could use to purchase compounding assets that give them money today and are worth more tomorrow.
So in some instances even ?secured assets? can be bad debts.
This also works with cars which plenty of people on here have seen me rant about. There are legitimate needs for cars and also for certain equipment related to work or business. However this equipment should be putting money in your pocket even while you are paying it off. If it doesn?t then you should attempt to minimize your cost so you can again, begin purchasing assets that begin the nice feedback loop of putting money in your pocket.
Credit card debt is the absolute worst. It has interest rates that are horrible and damages the ability to begin focusing on purchasing assets. Even worse many people will ludicrously claim things purchased with credit are assets. Items like big screen televisions, a jacuzzi, etc. Most items on credit need several times the purchase amount repaid in order to get rid of the credit card debt. Also since the debt is unsecured they are the quickest to report a late payment and damage your credit score. Credit card financing allows people to think they are wealthy when all they are is indentured. It often eats up $100-200 of people?s monthly income that they then can never use to gain experience with asset creation, purchasing and management.
Leverage debt is money borrowed to make a known return even larger. It is often not secured and typically costs more than secured debt, but not the price of unsecured credit cards. The most common type of leverage debt that I think the general populace is familiar with are student loans and small business loans. Both of these take money today in hopes of getting better earnins/income/return tomorrow.
Other people use leverage with stock picks to make a a good pick have an even better return. This is also true with construction loans, real estate etc. This is the type of debt that people often refer to when they say you are making money with ?other people?s money?
From my own point of view leverage debt is okay if you know what you are doing. Secured debt to get a home that you need, is okay. (Read not a McMansion that requires more than 23% or so of one income) Debt to finance equipment related to your improving your earnings is okay in my book.
However that is about it. The reason is to get out of the rat race. Different people use this term different ways, but the best understood definition is to get to the point where you have your money working for you, instead of you working all the time for your money.
You assets become additional you?s bringing in the income you cannot since there are only so many hours in the day and so many days in the week in which you can work.
This money, reinvested creates basically a wealth feedback loop that basically can go on indefinately growing. It works even when you can?t. DRIP?s in stocks are a great example of this.
Most people have ?invested? when they really have done nothing of the sort. They think of investing as putting some money in a 401k, mutual fund or some other such nonsense. They pay some hefty sums in hopes of getting a 4-6% return because they have no large sums of money to invest (often due to credit issues) or they have no investing experience because they never live far enough below their means to risk their own true money in investments.
Because they use these pretend investments, it is next to impossible for them to realize the huge gains of real investments where returns of 100-1000%+ are possible. Thus they never see the real value of investing, the freedom gained by having assets, and are content to load up on the debt to ?live while they can.?
Almost everyone you know has a ?If I only had? story or two. They know someone who had a house going into foreclosure. It needed paint, carpet and the three payments missing payments and they could have sold it for all the equity in it. The owner was begging to give it away, but I didn?t have the $5-7000 to grab the $25-30,000 I would have made from the sell of it.
Or gee I know this guy who mismanged his pizza restaurant. He was sick to death of it and was willing to let it go for $25,000 when it was worth about $40,000 and could be worth even more. He said he would even carry the note if someone had $5000 down to take it.
These are the little deals that get you started to the big leagues. You read about them all the time without realizing it. Why did that guy sell his CP/M clone to Bill Gates anyway? How much did Roy Kroc pay for that McDonald?s restaurant? Etc.
So to sum it up, not all debt is bad. Properly managed leverage can grow a good business into a huge great one with tons more return than you could get just gripping the dollars in your own hand. However you have to weigh the return.
Likewise consumer debt will almost always keep you from dabbling in stocks with your own money, finding that cheap second/third/fourth rental house, picking up that business that can be turned around for a huge gain, etc.
Anyway that is probably a pretty decent first attempt at some reasons,
Nick
The home itself isn't the liability. The exhorbitant loan you took out is the liability. The home is the asset. The loan is the liability. Yes, they go hand in hand. That's how accounting works.
Originally posted by trumptman
Because they use these pretend investments, it is next to impossible for them to realize the huge gains of real investments where returns of 100-1000%+ are possible. Thus they never see the real value of investing, the freedom gained by having assets, and are content to load up on the debt to ?live while they can.?
Nick
I think you need to start a whole thread on this. I've got a lot of questions for you.
Seriously, I enjoy these posts. Thanks for the informative discussions.
I think he somewhat addressed it later on, though. Referencing the part about renting out a house, playing some stocks, and investing in a business...
Originally posted by Willoughby
I think you need to start a whole thread on this. I've got a lot of questions for you.
Seriously, I enjoy these posts. Thanks for the informative discussions.
Originally posted by Randycat99
Yes, that passage caught my eye, too. I hope it wasn't just a cheap plug for some pyramid scheme (The Trumptman Pyramid Scheme).
I think he somewhat addressed it later on, though. Referencing the part about renting out a house, playing some stocks, and investing in a business...
Because they use these pretend investments, it is next to impossible for them to realize the huge gains of real investments where returns of 100-1000%+ are possible. Thus they never see the real value of investing, the freedom gained by having assets, and are content to load up on the debt to ?live while they can.?
No problem though I can only relate my own experiences.
First and foremost, no I am not speaking about a pyramid scheme or any other type of nonsense. In fact if I even hear mention of that sort of junk I get sort of pissed off at the folks advocating it.
I call these things pretend investments because the people participating in them really have no idea what is happening with their money. They are literally handing it over hoping someone will give them more back because they don't take the time to educate themselves and become a true investor. That is why the return is so pathetic on them. There is some marginal risk, but not really or else so many people wouldn't use them.
So you invest $10,000. The folks have a great year with their picks, they manage a 10% return and after fees and so forth you are left with an 8% gain. Your $10,000 has become $10,800. You gained a whole $800 for the year, but hey, 8% gain right!
Now suppose you had put that money into McDonald's this year which went from $12 to $24. That is a 100% gain.
Now I know you are saying, hey but you might not have picked a stock that was going to give 100% gain.
True, but of course you are never going to pick stocks that give gains if you keep letting someone else pick them for you forever. As with anything you get better with time and experience. In the meantime all you have to beat is a frigging measily 4-8% with your own reading.
However even that wouldn't be nearly good enough for me.
My vehicle of choice is real estate. Everyone has a different vehicle but I have always liked real estate. I'll give you two examples of my personal experiences.
In 1995 a gentleman had some stiff debt ratios. He wanted to buy a new home quick in a better Orange County neighborhood. The real estate market was very lukewarm. In fact it was just getting ready to go a bit cold. (However I didn't know that then, I was 24 years old.) However I had a good paying job, good credit and wanted to own a house.
So he signed it over to me for nothing.
The market wasn't hot enough to give him a price that would pay for a Real Estate agent and give him any profit. He wanted to jump on this other deal. He needed to get his debt ratios in line so he just signed the condo over to me for free.
I lived in it for three years and then had to rent it out because the market had gone cold at that point and I couldn't sell it either. So I learned how to become a real estate investor/landlord basically because I had no choice.
I rented it out for another two years and now the market had turned around. Property was hot! I sold that free condo for $15,000 of profit.
What was my initial investment? Oh right nothing. So what is my return? Infinity?!?
However it doesn't stop there. I took the $15,000 and bought a 3 bedroom house that was cosmetically ugly. (smokers, no yard work, trash, bad paint) I got it about $20,000 under market. I bought a $500 paint sprayer, brought my lawn tools and trailer over, and proceeded to make about $20,000 worth of equity in a week.
I then rented it out for $250 above the mortgage payment. (Easy to do when you have bought it for so much less than the prevailing market)
The renters took good care of it for the next year. The market has been good and it is now worth $60,000 more than I paid for it and already had $15,000 of equity in it since that is what I put down to buy it.
$75,000 worth of equity is in that house. What was the original investment again? Oh yeah... zero.
Second example. I found my apartment building that I own for sale almost two years ago. It was 5 units and going for $150,000. (This is in Southern California mind you where you can't even buy houses for that price) It had sat on the market for 10 months with not a single offer on it. The owners were two lawyer partners who had let it slide into a slum.
The owners were total turds who would rebuff any and all attempts to insure anything worked on the property.
I gave them the price they wanted and it took six months of coaxing to get the building through escrow. The same attitude that had let it become a slum was prevelent throughout the entire escrow. They didn't want to termite it, etc.
However six months later it went through after all the foot dragging. The loan required 25% down which I got by refinancing my house.
Now multi-unit buildings have their value determined not just by their size but by the rents they fetch. These guys were getting slum rents because they couldn't manage tenants and wouldn't fix anything.
I bribed the old tenants to leave and also figured out a way to clean up the place at the same time.
First I informed them that all the rents there would be more than doubling. (Because they would by the time I was done) I then told them they had a choice. I could give them a 30 day notice to leave. They could pay rent, stay the month and then have to move. I would use their security deposits to make repairs for any damage they had done, etc.
Or they could stay the first week for free, and then leave. If they left I would give them their full security deposit back with nothing taken out. I would give them an additional $50 just for moving on top of it. The last, and best part in my opinion, was that I offered them $50 each if all trash was removed from the front, back and sides and inside of their unit.
They took all the trash that made the whole place so undesirable and piled it in one place. It was an amazing array of stuff. Old TV's, lumber, old sofas, BBQ's etc. However it was now all in one place instead of all over the lot. (If I were smart I would have just rented a construction bin and had them fill it, but I wasn't)
They all took the deal (why not stay with a friend with cash in hand when change is coming) and a week later I had an empty building and clean lot for $500.
I rented a dump truck for a day and hauled all that stuff off to the dump. I have dump fees for 10 tons of garbage.
I spent the next 2 weeks painting, making small repairs, etc. I paid $3000 and had all 5 units carpeted. I had to buy some appliances, materials etc. Probably about $2000 in all (vinyl flooring, cleaning supplies, etc.)
There was a week left in the month and I advertised them with the rents, as I said at double the previous rate. However now the building had new paint inside and out. The lot was cleared of all trash. It had lots of nice little touches like $20 ceiling fans throughout.
The place was full in less than a week at exactly the rents I wanted. The place clears about $1500 a month and as a result of the rents is worth about $350-375k depending upon how aggressive you want to price it. (I tend to be conservative.
$1500 income. $200,000 of equity for an investment of..
$500 to get everyone moved out.
No money down, but equity out of my house.
about $5-6000 of paint, carpet and appliances.
What do you think the measured return on that should be?
Now people will scream.. Nick, that had to be a 1 in a 10,000 chance of finding a place like that. I mean that is .001 percent. Even the house had to be 1 in 5,000 or .05 percent. Those odds are too hard to deal with!!
Well except for there are 10,000 homes in this town, and 10,000 in the next town, and 20,000 in the town after that.
Once you get past the end of your nose and start thinking about how insignificant you really are, it actually makes it easier to find the deals.
Same with renters for me. My town has 20,000 people. The next has 20,000, 35,000, and so on.
I need to find just one renter each time I rent out a place.
I think the odds of finding one out of say, 75,000 possible people is pretty good.
I have thought about looking into some restaurants next. I really like pizza. I also plan on taking my current number of properties to at least double their number before I am 40.
I will not have a car payment though for example. When I wanted a new car, I bought a used Cherokee for $3300. In fact just about everytime one of my friends buys a car, I have just closed on a house.
Now take that return issue from the mutual fund. The two examples I gave you are worth $550,000. Suppose they go up a whole 2% in the next 12 months. I would gain $11000 worth of equity. Take that out 5 years even uncompounded and it is $55,000 to buy houses that most people don't have. So refinance it out and buy 2 more houses and watch the process work again at double the return.
See those houses are my employees. They work for my business. I am one man with a limited amount of time and effort. So they have to earn what I cannot. The additional income they earn above the mortgages just makes it even easier to hold out for better renters, higher rents, make more improvements that raise the value of the home, etc.
That is what consumer debt kills, especially car loans.
Nick
Trust me, there is no better feeling than knowing you owe not one single cent to anyone.
I still prefer good sex.
Every penny I make is mine to do what I please with ... I don't have to come up with anything to pay VISA, Ford motor credit, etc...
I can make risky investments if I want to .... If I lose, I still don't end up in bankruptcy, because I don't owe anyone anything.
Amazing how fast a savings account grows when you start pumping it up with the 400/month that used to go to a car payment, the 500/month that used to go to the other car payment, the 500+ that used to go to credit card companies every month, the several hundred per month that used to go towards property taxes and homeowners insurance....
So I can rent a home for 4-5 years and then go pay cash for a house .... hmmm.... sounds like fun. Trade five years of rent for a paid-for home for the rest of my life ? ... then I don't even have to fork out 2 grand a month for rent anymore. Wonder what my lifestyle would be like at that point ?
Trumpet made several good points (sounds like he plays the "cashflow" game or whatever it is called)... in general, debt is just plain dumb and I have yet to hear any good justification for it.
Originally posted by KingOfSomewhereHot
I am debt free - 100% ... this hasn't always been the case, but it is now !
Every penny I make is mine to do what I please with ... I don't have to come up with anything to pay VISA, Ford motor credit, etc...
I can make risky investments if I want to .... If I lose, I still don't end up in bankruptcy, because I don't owe anyone anything.
Amazing how fast a savings account grows when you start pumping it up with the 400/month that used to go to a car payment, the 500/month that used to go to the other car payment, the 500+ that used to go to credit card companies every month, the several hundred per month that used to go towards property taxes and homeowners insurance....
So I can rent a home for 4-5 years and then go pay cash for a house .... hmmm.... sounds like fun. Trade five years of rent for a paid-for home for the rest of my life ? ... then I don't even have to fork out 2 grand a month for rent anymore. Wonder what my lifestyle would be like at that point ?
Trumpet made several good points (sounds like he plays the "cashflow" game or whatever it is called)... in general, debt is just plain dumb and I have yet to hear any good justification for it.
I haven't played Cashflow because I won't spend the $200 for it. That buys a lot of financial books.
Have read some of the Rich Dad "brochures." The information in them is good, but they are pretty light reads. Definately good for someone just wading in though.
Nick
Lets say your only debt is credit cards and you're a renter. What is a good trade off? Should you pay as much as possible to the credit cards and nothing into savings or half and half?
Should you try and get a mortgage on an apartment that you can rent out over the mortgage price, even though you are still in debt?
Basically the question is....do you need to be fully out of debt before you can start investing?
It sounds all fine and dandy to build up assets to the point where one can really begin to live in peace without any financial worries. But how long is this going to take? Are we being overly optimistic of retiring at the age of 50? How much are you going to need to put away or invest during your 30's and 40's.
And this goes to the crux of the discussion. If you only begin to "enjoy life" when you retire (say 50-55), will you have lost out on the 20 years during your prime?
Originally posted by Willoughby
Ok, so if you're already IN debt how are you supposed to get out of it to start gaining assets?
Lets say your only debt is credit cards and you're a renter. What is a good trade off? Should you pay as much as possible to the credit cards and nothing into savings or half and half?
Should you try and get a mortgage on an apartment that you can rent out over the mortgage price, even though you are still in debt?
Basically the question is....do you need to be fully out of debt before you can start investing?
When I started trying to get out of debt, I was 26. I had about $12,000 worth of student loans, $9,000 worth of credit card debt and two car loans worth over $30,000 worth of debt.
I was never fully out of debt before I started investing. With consistant effort that debt took about 3-4 to make disappear.
We just decided to be frugal and in a way make it a bit of a game. Then whever unexpected money occured, like say a tax return, or a raise or bonus occured that we didn't know was going to happen, etc. we used it on the debt.
The method I have heard used most often and that I used myself is basically to take all your debt payments and consider that one dollar amount.
So say you have four credit cards.
$200 payment, $10,000 owed
$150 payment, $5,000 owed
$100 payment, $4,000 owed
$50 payment, $2,000 owed
So your total debt payment is $500 a month. You decide with some thrift you can devote $650 a month to getting rid of this debt. Lot of folks split it between the cards. Instead put all the extra amount on the smallest debt. So the whole extra $150+original $50 goes on the smallest card, $2,000.
Then when you have that card paid off, you don't reabsorb the now "extra" $200 a month back into your budget, instead you devote that full $200 to the next card. So now you have $200+$100 going onto that next card.
So basically use $650 a month and don't change it when a card disappears! Instead keep those payments and devote them to the next biggest card until they are all gone. It really can work pretty quickly. Especially when you get those occasional chunks of cash and don't blow them but devote them to getting rid of the debt. Likewise try to keep any raises (if possible) and devote all of them to the debt.
The best part about this approach is in a sort of reverse way it demonstrates the power of a compounding return. How the same amount of money can do more and more over time.
Nick
Originally posted by satchmo
All very good posts...and thorough (Trumpetman).
It sounds all fine and dandy to build up assets to the point where one can really begin to live in peace without any financial worries. But how long is this going to take? Are we being overly optimistic of retiring at the age of 50? How much are you going to need to put away or invest during your 30's and 40's.
And this goes to the crux of the discussion. If you only begin to "enjoy life" when you retire (say 50-55), will you have lost out on the 20 years during your prime?
Here's your magic pill...
Just messing with you. I don't know about retiring at 50-55. I'm only 33. I haven't ever really thought about retiring early, just having the ability to do so.
Satchmo in case you hadn't notice I haven't really out very much money into this whole investment game. I just get really good returns.
You don't have to "stop living" as you termed it. Rather you start living when you have the freedom to devote your own money to yourself.
For example I took my wife and I on a 4 day cruise this year. We had never been on one before. I got the deal in December though and so the whole cruise as $400 instead of some other ridiculous amount. For my wife, the pleasure wouldn't have been swimming/laying out in the sun for 4 days. It was not having to cook, being waited on hand and foot, never having to clean a dish or make a bed, etc.
I've taken the kids to Disneyland 5 times this year with our annual passes. We have spent almost 2 weeks at the river, swimming and boating. We go to the snow in Idyllwild, etc. We take trips all the time, especially in our 28 ft long motorhome. (I picked it up for $2000
Now what about in the meantime while you are devoting yourself to getting rid of debt. It only requires some small changes. See some movies at the $1.50 theater instead of for $7-8 at the first run theater. My wife and I still enjoy going to the drive-in because we have two little ones. The drive in costs $5 per adult to watch two first run movies. We bring our own food.
Books, buy the paperback instead of the hardcover. CD's limit yourself to a set number per month instead and prioritize instead of just buying as many as you want. Better yet write them down, join a cd club. Get the 12 free, buy a couple more and then quit the club.
Food, go for the generic brand. You often don't NEED a certain brand so much as you have just gotten use to the taste of it. Give yourself a week with a different brand and often you miraculously "acquire" that taste instead. My dad is the most vice ridden man on planet, but he drinks diet pepsi after taking a bet that if he drank it for a month solid he would prefer it. A month later he preferred diet.
Eating in with fewer processed foods is better for you and cheaper. Drink water instead of soda at .50 a can. If you can't stand water, try tea. If you can't stand tea try crystal lite. etc. You know what you can tolerate along each sliding scale of cost.
The book we got many ideas from was "The Tightwad's Gazette" but there are many books like it. However while you are getting rid of your debt, a week long camping trip in say Yellowstone in a tent with some board games still yields fantastic memories and is much cheaper than say airfare, hotel fees, etc. to Hawaii, Jamaca, etc. Hit a few yard sales for the camping equipment or borrow it from a few friends. Almost everyone has some and it all seldom gets used.
However the best way of living is just getting your time back. Most people I know miss out on dozens of cheap opportunities just because they don't have time. So choosing to minimize your work time gives you the time to make the best use of your own money and time. My wife and I earn less now than we did in 1998 because she is staying home. We were earning about $80,000 a year when she was working and now we bring home less than $60k, but started at about $43,000 when she first quit. She will discover a museum we haven't gone to yet, or get a call from a friend who wants to dump some tickets they have for an event, but don't have the time to use because of work, etc. You don't solve money problems by earning more.
Rather you start by prioritizing, claiming your own time back and investing in yourself.
As I said there are about a dozen books to read that can help clarify this line of thinking. There was a passage in "The Tightwad's Gazette" that clarified the thinking for me involving Christmas and presents. I will have to borrow it back from my brother so I can type it in here.
Nick
Originally posted by Willoughby
Basically the question is....do you need to be fully out of debt before you can start investing?
If your credit card debt is costing you 10% per year, and you're thinking of investing in a fund that returns 2% per year, then definitely forget about the fund and pay down your credit cards instead. In general, most consumer debt is going to eat away at you quicker than most investment returns, so getting rid of debt first is probably a good idea.
I look at debt this way: debt is bad if it's for a depreciating item, like a car, or clothes, or food. Debt is OK if it's for an appreciating asset, like a house, or a business, or even education, which should improve your ability to make money in the future.
Student loans, home mortgages, business loans: good debt.
Car loans, consumption (clothes, dinners) on credit cards: bad debt.
Good debt is good because you expect to make more money on the investment in the long run. That's obviously not the case with the car or dinners.