Originally Posted by cmguy
Financial leverage is a kind of like fire - it isn't good or bad, just something that can both burn you or help you get a tasty steak. I am in the Old Dad camp with regards to debt, but this is only partly rational. Some of us are temperamentally unsuited to the stress of being debtors.

Oh, I'm not saying I agree with how "Rich Dad, Poor Dad" describes leverage, I'm only reporting on the difference. Whether we're talking about tulip bulbs, stocks, or houses, we've seen time and time again how the reckless use of leverage to acquire assets tends to end. Excessive limitation of leverage will restrict growth, excessive availability creates disaster, and as in most things, moderation is the only reasonable path.

From a household perspective, moderate use of credit promotes a rise in your credit rating, which makes debt far cheaper to acquire. This can mean huge savings when buying a home, or when you can't step back from the precipice and jump into $200k of college debt per child. A young person might start out on this journey by financing a car, and end up paying several thousand extra in financing fees, then use that debt to acquire credit cards (which get paid at the end of each month, costing $0), and finally translate that into a home loan (an appreciating asset that doubles as necessary shelter) that saves tens of thousands over the life of the loan due to superior credit.

Of course, you're not going to get wealthy this way. To get wealthy, you need to take big risks, preferably with somebody else's money.