Good Debt, Bad Debt and Flawed Investment Return Data

I can’t tell you how often I hear or read someone argue that they have “good debt.”   This “good debt”  argument is made to rationalize having a car loan, a HELOC or second mortgage balance, and even credit card debt.  The argument goes something like this:  “The money I have borrowed is being paid back at 6% interest.  Instead of paying it back all at once, I have invested the money in the stock market which historically has an average annual rate of return of 12%.  So I come out way ahead.”  (Yes, 12% is the number I read most often.) Read more