The Truth About Debt (Uncut) 02-16-2025

The Truth About Debt: Why I Disagree With The Experts (Dave Ramsey & Robert Kiyosaki)

In today’s video, let’s answer this very important question, is all debt bad and should you avoid it? So Dave Ramsey says that debt is always bad and it should be avoided. Robert Kiyosaki says that there’s good debt and there’s bad debt and you should load up on good debts to become rich. So I want to show you these video clips of Dave Ramsey and Robert Kiyosaki and then I’ll give you my opinion on debt, which is completely different than Kiyosaki and Ramsey.

And let’s start with Dave Ramsey. So please take a look. You’re not going on vacation.

You’re in debt. You’re broke. You’re not going out to eat.

You’re in debt. You’re broke. You work all the time.

You’re in debt. You’re broke. There’s a great place to go when you’re broke to work.

OK, this is what you do and you bust your butt and scorched earth, no lifestyle, no nothing. You sell so much stuff the kids think they’re next. You name the dog eBay and the cat Craigslist.

Everything’s going out the door. We’re getting this mess cleaned up. We’re sick and tired of being sick and tired.

People that do it with that intensity get out of debt in an average of about 18 to 24 months. So as you can see, Dave Ramsey is clearly anti-debt. Now, I want to show you Robert Kiyosaki’s opinion, which is completely different than Ramsey’s.

So please take a look. Well, there’s two kinds of debt. There’s good debt and bad debt.

Good debt is debt that somebody else pays off for you. So when I buy an apartment house with my friend Ken, I don’t pay for the bank, lends us the money and debt is tax free. Right.

So let’s say we put a billion dollars down to buy a five million dollar apartment. So we now have a five million dollar asset. Our tenants pay for that’s good debt.

But I take my credit card to go eat sushi. That’s bad debt because I got to pay for it. And it’s that simple.

This is basic financial education or financial literacy. So Robert Kiyosaki says that there’s good debt and there’s bad debt. So if you know his work, he explains it like this.

He says that good debt is debt that generates income for you. So an example of that is if you get a loan to buy an investment property. He says that bad debt is consumer debt.

So a very straightforward example of that is if you’re in credit card debt. So Kiyosaki says that good debt helps you get rich. Bad debt makes you poor.

If you want to get rich, load up with good debt. So Kiyosaki brags that he’s over one billion dollars in debt. Now I’m going to give you my opinion towards debt.

And it’s completely different from Ramsey. It’s different from Kiyosaki. And I’m going to explain it to you like this.

So this is actually how I explain it in chapter five of my book regarding debt. Okay, so Dave Ramsey says that debt is always bad and you should stay out of debt, right? And Robert Kiyosaki says that there are good forms of debt and you should load up on it, right? So first, let’s answer this. Is debt good or bad? My philosophy is that debt is always bad, but stay with me because it doesn’t end there.

So debt is always bad. However, if the benefits outweigh the drawbacks, it may be in your best interest to take on debt. So let me explain.

So in chapter five of my book, I explain it with this analogy. You getting punched in the stomach is a bad thing, right? But what if you were offered one million dollars to get punched in the stomach? If you decide to take the deal, it does not change the fact that getting punched in the stomach is a bad thing. You know, getting punched in the stomach still is a bad thing.

You’re only agreeing to getting punched in the stomach because you believe that the pros outweigh the cons. That a million dollars is worth getting punched. Now it’s the same thing with debts.

If you take on debt to make you money, let’s just say student loans, a business loan, money to invest in rental properties, etc. That debt, it’s always going to be bad. However, I’m not saying don’t borrow money.

I’m just saying that you should only borrow money if the pros outweigh the cons and if you can handle the risks that come along with it. But that’s the thing. You must analyze the situation well.

For example, if someone offered me a million dollars to get punched in the stomach, then I would want to know the details, assess the risks involved, and think of worst case scenarios, you know, such as who’s punching me. Is it going to be Mike Tyson in his prime that’s going to punch me? Because if it is, then I wouldn’t take that punch because that punch would most likely kill me, in which case it’s not going to be worth it. But that’s the problem with people taking on debts because many people ignore the risks, they ignore the dangers, and they get blinded by the pros and they don’t consider the cons.

So you really need to see the risk to reward or the pros and cons. So I want to give you a real life example. So let’s just say that you came across an extra $5,000.

Maybe you got a bonus at work or a big tax refund, whatever it may be, let’s just say you’re $5,000 richer. And let’s say with that money, you can either pay down your mortgage that has a 2.75% interest rate, or you can put in your Roth IRA, which has been earning you an average of, let’s just say, 8% a year. Which one will you choose? Pay down debt or invest it? Personally, I would rather put the $5,000 into the Roth IRA because the expected rate of return is much higher.

So sure, in the short run, that money in the Roth IRA may return less than 8%. However, a guaranteed 2.75% is just too low. I’d rather keep that low interest rate debt and try to make more than 2.75% a year.

But now let’s change the variables. What if your mortgage interest rate was 7%? In this scenario, I would rather put that $5,000 towards paying down my mortgage because that’s a guaranteed 7% rate of return. And I would rather have a guaranteed 7% return versus an expected 8%.

So listen, regarding debt, essentially you need to assess the situation. I don’t think it’s fair to say that you should always avoid debt at all costs because this is going to lead you to miss out on opportunities or optimizing your finances. And I think it’s dangerous to tell people to load up on good debt because an excessive amount of debt brings excess risk.

So my philosophy is that debt is always bad. However, if it’s worth it, utilize the debt. If it’s not, then don’t.

So take it as a case-by-case scenario. Now, if you think that what I just said is simple, then I’ll tell you that I do too. However, and surprisingly, this idea is revolutionary because I’ve never seen anyone else say this before or explain it like this.

At least to my knowledge, if you’ve seen it, then please show me the video clip or the book in which it’s written because I’d like to see. Because normally it’s either one extreme or the other, but this is the way that I see it. So therefore, I’m telling you my book about building wealth.

It’s very simple, it’s very straightforward, and it is revolutionary. It’s going to change lives. So listen, I want to tell you this so you know where I’m coming from.

So personally, I don’t like debts. I hate owing people money. I don’t even like owing people favors.

I try to avoid debt, but I’m willing to take on debt if it makes sense. Now, in terms of bad debt or consumer debt, I mean, I don’t need to lecture you on this. You already know it’s a bad idea to pay for a vacation that you don’t have the money for with a credit card.

But when it comes to other common forms of debt, I’ll tell you this. In my life, I’ve been in debt. In my younger years, I was in credit card debt.

I’ve had an auto loan. I’ve had a mortgage. I’ve had a HELOC.

I’ve had business loans. But during all that time, I didn’t like being in debt. I didn’t want to be in debt, but when you have no money, what can you do? I’m just being realistic.

Now, obviously you want to pay those off because again, all debt is bad. However, if you can find ways to be more productive with your money than paying down your debt, then I think that approach is okay. You must weigh the pros and cons.

However, from experience, I want to tell you that if you’re debt-free, a big benefit is that your life financially is just so much more stress-free. Like the feeling of financial security, it is just absolutely wonderful. Honestly, it’s truly hard to describe.

Okay, so we covered the situation of should you prioritize paying down your debt or investing? But there’s also going to be the situation of whether you should borrow money to make more money. So if you ask me, for example, should you borrow money to go to college? Should you borrow money to start a business? Should you borrow money to invest in a rental property? Then my answer to you, it’s either going to be one of three. It’s going to be one, a hard no, don’t do it.

Or two, it depends. Or three, yes, do it. I mean, it’s going to be one of those.

And my answer is that it depends. It depends on the pros and cons. It’s a case-by-case scenario.

So it’s not as simple as yes all the time or no all the time. And assessing each situation requires that you do your homework and your research. Good starting questions to answer are how much will the debt cost? What’s the expected payoff? What can go wrong? What’s the likelihood that something’s going to go wrong? And how much damage will you take if things go wrong? So I believe that’s a good starting point of assessing the situation.

So personally, that is my take on debts. A little bit different from Ramsey and Kiyosaki. If you enjoy my content, please check out my book on Amazon.

I encourage you to do so. The Book of Wealth, 10 Steps to Financial Freedom. I’m going to leave a link for you down below.

Thank you so much and wish you a very nice day.