McFroggin
Active Member
So how many people on here subscribe to the theory you should take on debt as long as you can earn more than the interest rate?
I’m going to need to buy a new vehicle next year, plan is to pay cash but theoretically I could take debt at a terribly low rate and surely beat it. Thoughts?
First ask yourself how the bad debt will effect you.
If you are a stock market/passive person, I’d get an interest rate under 2% and ride it out. The market will beat it 90% of the time. That’s a rough number, but obviously odds say invest.
If you are a real estate person, bad debt may effect your debt to income ratio and other factors that alter your ability to qualify for loans. If you can get your spouse or yourself to qualify as a real estate professional under the tax code, you should do it. This type of person should pay cash.