 Risk Risk Risk
Everyone here is talking about how we need to have good debt, but what about risk.
Let’s say I buy a house at 100,000 dollars and put down 25%. I now have a $75,000 loan. That loan must be paid, even if there are no tenants. So if you miss about six payments, you will be foreclosed on.
Now let’s instead say that you buy the same house with $100,000 cash. It would not be possible to miss a payment, because there is none. Also the profit per month increases. With a payment, it would only take a couple of months of no tenants to wipe out profit for the year.
I think the same idea about the personal home.
Person A and person B both have $200,000 homes. Person B has a mortgage of $180,000, person A has a paid for home. Both A and B loss their jobs. Person A will have an easier time surviving the person B.
I think Dave Ramsey has the better idea of being debt free.
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