If debt were bad, we wouldn’t have many rich Americans, says investment adviser and financial planner Ike Ikokwu.
“The three most common ways people in this country get rich all involve using debt,” he says. “They use it to launch businesses, invest in real estate or pay for advanced degrees in order to become high-income earners.”
Ikokwu, author of “Winning the Money Game: Separating the Myths from the Truth,” says admonishments to “stay out of debt” are just one of the myths that prevent people from gaining financial independence.
“My definition of being ‘debt-free’ is to have enough money so that you can pay off your debt at any time – if you need to,’’ he says. “But you don’t necessarily want to do that. Good debt can save you money on taxes, increase your investment gains and allow you to take advantage of wealth-building opportunities. Bad debt, on the other hand, is like having a big hole in your money bucket.”
Ikokwu developed a new personal financial plan after a period of successful investing imploded following the market crash in 2001. After filing for bankruptcy in 2003, he rebuilt his wealth – using his new plan – in five years. Today he is financially independent and his wealth secure.
What are some other common myths he suggests people should abandon?
- What are some examples of good debt?
- Bad debt?
- You say the fastest way to pay off your home is with a 30-year mortgage – not a 15-year. That sounds crazy! Can you explain?
- Why do you avoid qualified retirement plans, like 401ks and IRAs?
- Why is it a mistake to assume you’ll be in a lower tax bracket when you retire?