Some argues that there was ‘good debt’ and ‘bad debt’. The good debt was debt that was used to generate a positive cash-flow, such as borrowing money to buy rental property with a positive cash-flow. Bad debt was debt that on depreciating consumer goods, like cars and clothes and furniture. The money borrowed to purchase these items creates a negative cash-flow.
Today, the quickly collapsing housing market and the tightening of the entire economy feels like a rope around our neck. This recession has brought a new appreciation for debt. Like many other personal financial concepts of the old economy, good debt and bad debt no longer apply.
The only thing we know is that all debt is bad and is capable of enslaving the borrower. One day we were skipping down the bunny trail enjoying the land of milk and honey, and the next day we found ourselves chained to the door of the fox house, while he sharpens his knife inside. Last year all we could think about was eating cotton candy at the next summer fair and now all we can think about it surviving until next summer.
Debt has always been bad. The only reason that it appeared to show some good qualities was because we were living in a phony economy - that was propped up by the Federal Reserve and congress. The phony economy is quickly disappearing. Our understanding and appreciation about money is changing with the deepening recession. The way money was used for the last decade along with most of the teaching about how to use money were wrong.
We are at the beginning of the ‘money revolution’, where new ideas about money are gaining momentum and new agreements are forming in every house hold in America. We have been fooled, debt is not as fun as we thought it was. Debt is slavery. America must get out of debt as fast as we can and then change the way we live to never become a slave again. Make it a goal next year to free yourself of the bondage of debt (slavery).