The Cash Flow Clock: For Retirees - Book - Page 93
The Cash Flow Clock
Leverage
One of the biggest concerns for households is
managing their debt. Clearly, consumer debt, with
interest rates often exceeding 20%, has an extremely
destructive effect on our finances and should be
avoided as much as possible. Mortgage loans,
however, offer home ownership opportunities that
otherwise wouldn’t exist for most families.
Understanding how to leverage our assets and
liabilities is a critical aspect of financial planning.
Many financial gurus encourage everyone to get out
of debt, especially before they retire. That seems like
a good idea. No one likes to owe money or pay
interest. But sometimes being in debt is better than
the alternative.
There is never a good reason to pay 20% interest on
consumer items that have no chance of appreciating
over time. But there are many good reasons to take
on a low interest mortgage to purchase real estate that
not only provides a home for our family but also an
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