In many personal finance circles, the word debt has just as many negative connotations as the word carb does to dieters. The usual reaction is one of stark horror, condescension or even downright hatred. There are actually quite a few similarities between the two, both good and bad.
1. They both go straight for the waistline. While carbs attack your tummy, debt prefers to go for the wallet, but in the end, they’re both headed in the same direction.
2. They both can be addicting. Ever see someone trying to give up carbs for a day? They look remarkably like someone trying to stop using credit cards.
3. They both make you feel guilty. Carbs can inflict tremendous guilt, usually right after you cave and devour an entire cake. People in debt have remarkably similar feelings of guilt, especially after a spending spree.
4. They both damage your future outlook. Eat too many bad carbs for too long, and you may end up with lasting health problems. Spend too much for too long and amass a bunch of bad debt and you’ll be in a similar position financially.
5. The damage they cause can take a lot of money to fix. The diet industry is worth billions and strangely enough, so is the debt recovery industry. Too much of either can cause quite a drain on your finances no matter how you look at it.
But, the comparisons aren’t all bad… The difference comes from understanding how good carbs and good debt can actually benefit you.
6. They both provide fuel. Good carbs provide your body with the fuel it needs to function. Likewise, good debt provides your finances with the fuel to grow.
7. They both make you stronger. Good carbs contain the proper balance of nutrients that your muscles need for strength. Good debt provides you with the strength to keep growing your finances and amass more wealth.
8. They both can decrease your blood pressure. Eating the proper balance of good carbs has a positive effect on your entire body, including your blood pressure. Likewise, good debt that brings in more income for you will help you avoid the stress of worrying about money.
9. They both keep you running smoothly. Good carbs keep your bodily functions running smoothly and likewise, having good debt that is working for you by helping you create more than one stream of income can keep your finances running pretty smoothly too.
10. They can both taste pretty sweet. Let’s face, some carbs just taste good – but so does the success you can taste when you’ve managed to leverage good debt into your own little empire.
As with anything in this world, too many bad carbs and too much bad debt can be harmful. However, when used properly good carbs and good debt can actually end up being beneficial to you in many different ways. The key is finding the right balance, and understanding the difference between both good and bad carbs, as well as good and bad debt.
This is a guest post from the author of Rich Credit Debt Loan.
photo credit: photo bucket.
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- Fair Debt Collection Practices Act
{ 10 comments… read them below or add one }
Fantastic post! The parallels are not only hilarious but VERY true.
#10 is best- good debt and carbs DO, in fact, taste great! Leveraging you debt to improve your financial position can be risky, but the payoffs are often huge.
Ah yes, another cryptic reference to “good debt.” Apart from a home mortgage, people seem to think that “good debt” is debt that pays off in the end and “bad debt” is debt that costs you money. OK – I’ll buy that but it’s valid only in hindsight. So what are the criteria that you apply to make sure that “good” happens?
In the meantime, I’m eating protein.
I have not read Kiyosaki and probably will not because I’ve heard a lot of strange things about his views. Calling a house that provides you tax-free shelter services a non-asset doesn’t make sense to me. If I am retired and don’t need income to pay a mortgage or rent because I own my home, that is a huge asset in an overall financial plan. If my rent would be $1500 per month otherwise, that paid-up house is throwing off imputed income in that amount every month, tax free.
Tough Money Love,
I don’t have a definitive answer, but I think that if you take on debt that gives you opportunity to make money in the long run, it could qualify as good debt. In addition to a mortgage, where you are acquiring an asset, a small business loan could qualify for this definition.
Of course, by Kiyosaki’s definition, a mortgage isn’t an asset even when you pay the house off, unless you can somehow make money from it via rent or something else.
I think it comes down to different flavors of debt. Debt for a mortgage or business isn’t necessarily as bad as debt to pay off a new wardrobe or sports car.
TML, I understand your view, and agree with it. It is a blessing not to have a house payment or rent.
Kiyosaki has some interesting views (some of which are eye-opening in a good way; some of which can be downright dangerous if taken out of context). Regarding assets, his view is that if it doesn’t produce income, it is not an asset (until it is realized in a sale).
I’m not quoting Kiyosaki because I agree with his views and can’t think for myself. I am merely presenting another viewpoint. In my opinion, a mortgage and owning a house can qualify as an asset.
I took on some debt a while back on a 0% intro apr card for 15 months. I didn’t have the cash in hand immediately, but the deal on the item was really good. So I made a plan to pay it back over the 15 months, in the same way I might save for it over 15 months. Difference being, 15 months later and no similar deal in sight. And debt paid off.
In the same way, I ate crackers last night an hour or so before running. Needed the immediate energy boost that only carbs could give me, but didn’t eat so many that I would get sick or go over my caloric limit.
Good post!
Thank you CML for the opportunity… I am glad that readers found the post both interesting and humorous… My humor being dry I am never sure if others are following or not…
Personally I look at good debt as debt that provides the opportunity to create wealth and increase income streams.
RCDL aka WeightLadder
Do I hear a healthcarbslife website being branched out of cashmoneylife?
DGI
LOL. Not from me.
Rich Credit Debt Loan,
Thanks for sharing this with everyone!