Debt Myths That Defy Convention | Generated by AI
Here are some genuinely unpopular or contrarian perspectives on debt and mortgages that challenge conventional wisdom:
Mortgages aren’t always the “good debt” people claim. Many financial advisors treat mortgages as smart leverage, but some argue that being debt-free—even on a home—provides psychological freedom and financial flexibility that outweighs the potential investment returns from keeping a mortgage. The “rent money is wasted” mantra ignores that interest, property taxes, maintenance, and insurance are also “wasted” in the sense they don’t build equity.
Renting long-term can be financially superior to buying. This flies in the face of the “American Dream,” but in high-cost areas or for people who value mobility, renting and investing the difference between rent and total homeownership costs can build more wealth than homeownership, especially when factoring in opportunity costs and transaction fees.
The 30-year mortgage is a terrible deal. While popular for lower monthly payments, you pay roughly double the purchase price over the loan’s life. Some argue 15-year mortgages or aggressive prepayment makes more sense, even if it means buying less house.
Paying off low-interest debt early is sometimes rational even when “the math says invest.” The standard advice is to invest rather than pay off 3% debt if you can earn 7%+ in markets. But some people value the guaranteed “return” of debt elimination, reduced risk, and simplified finances over probabilistic higher returns.
Strategic default during the 2008 crisis was arguably rational, not immoral. Many people believe there’s a moral obligation to repay mortgages even when underwater, but some economists argued that walking away from a severely underwater mortgage was a rational business decision, especially since corporations do this routinely.
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