The best way to borrow money
All debt is not created equally. In order to maximize life and minimize stress, you must compartmentalize good debt from bad debt.
- Low-cost debt should be used as a tool.
- High-cost debt should be avoided and eliminated.
- The line between low-cost and high-cost is approximately 5%.
- Keep debt with an interest rate under 5%.
- Avoid and pay off debt with an interest rate over 5%.
See related article:
Why you should not pay down your mortgage debt
How to borrow for less than 5%
The best way: mortgage
If you own a home, the majority, if not all, of your borrowing should be in a mortgage.
This is not to say that owning is superior. There are many times that renting makes much more sense. When you get my detailed plan I will guide you on things to consider.
Other ways to borrow for less than 5%:
- Student loans
- Car loans / car leases
- Home equity line of credit
Any of these at or around 5% are a great ways to borrow money. If they are above 5%, take it off the list.
Wealth management loan
For those who qualify, all of your borrowing, outside of a mortgage, should be through a wealth management loan.
Rates are generally between 2% and 3%, tax deductible. I provide specific guidance and detail for those who are eligible in my detailed plan.
Other forms of borrowing
Any borrowing at a rate over 5% should be avoided. This includes most every personal loan, credit cards, and other forms of lending.
Note on credit cards:
You should never carry debt on a credit card. However, you should use one each month for the benefits / to transact.
How may I help you?