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Defending Debt – Why It’s Good

"defending debt"When it comes to the best ways to use money, too many Americans operate under a key misconception, says investment adviser and financial planner Ike Ikokwu.

“Money is opportunity, and having a blind spot for maximizing investment can drastically reduce one’s future options,” says Ikokwu, author of Winning the Money Game: Separating the Myths from the Truth (

That blind spot is debt, he says. Just as Americans have learned that are such things as good fats and good cholesterol, so too is there good debt for a prosperous financial future.

“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.”

Some myths born from the idea that all debt is bad include:

• Paying off your home mortgage provides financial security.

• A 15-year mortgage is always the quickest way to pay off your home.

• Putting money in your 401K or other qualified plan saves you taxes.

• The stock market is the only place to generate high, double-digit returns.

Admonishments to “stay out of debt” prevent people from gaining financial independence, Ikokwu says. Investing in education, a new career in another state or a new business may be more lucrative than paying down a mortgage.

“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.

“To a greater extent than many Americans suppose, money is plastic,” he says. “That means you do not have to be rich in order to gain more wealth, and we do not have to follow old, outdated paths. We can all mold the money we have to a shape that yields better return.”

About Ike Ikokwu

Ike Ikokwu, “The Financial Independence Coach,” is a CPA, CFP and registered investment adviser.  Ikokwu is president and CEO of Winning the Money Game with Ike, a tax and financial advisory firm in Cumming, Ga. While working for “Big 6” tax firms and buying real estate, Ikokwu funneled  profits into domestic and international investments, only to realize too late that they were Ponzi schemes. Forced to declare personal bankruptcy in 2003, Ikokwu rebuilt wealth by changing approach to finances.


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  1. I’m going to agree on the 401K and stock investments. However, having your home paid off does give you much freedom and peace of mind.

    I do understand using debt responsibly for a business. Let’s say you have buyers for 1000 widgets with 50% profit. You don’t have money to buy those 100 widgets so you buy those on credit (debt) and get them sold, pay back the debt for the widgets collect the profit. Money you would not have without the short term debt.

    Another thing to look at is how debt has increased the cost of things. If we had to pay cash for a vehicle, do you think the cost would be as high as it is? The price of education has gone up more than medical cost. If students couldn’t get 100k+ in student loans, the cost of education would go down. Same thing with homes. Medical insurance is another thing keeping prices up, the expenses aren’t coming directly out of our pocket when we visit the doctor to have surgery done, etc. Too often because of debt people look at the immediate cost of that debt such as my car costs me $400 a month, instead of the true cost of the car. Or monthy cost to repay student loan.

  2. Craig Olson says:

    Great points made here. Credit card and other consumer debt is probably the worst kind of debt as it is not an investment, it’s just a “hole in your money bucket.”

    On the other hand, real estate debt isn’t always a good thing either (witness the loss in value many home-owners experienced in the last 4-5 years).

    But I like your definition of being debt-free: “having enough money to pay off all your debts, should you want to.” I’m not there yet, but am working on it with my blog. It’s not specifically about leverage or investments, although it does fall under the broad category of education, as a means of increasing earning potential.

  3. Not all debt is good, however consumer debt is rarely a good thing. If the debt is used to purchase an asset which increases in value or reduces your outgoing expenses (for example, purchasing a home eliminates the need for renting) then it may be ok, however borrowing for the purposes of a holiday or to buy a new bag is rarely going to be a wise decision.