Browsing through old posts here on Queercents, I came across Paula’s post on how being debt-free can harm you. A skeptical commenter pointed to Dave Ramsey’s site about the ‘œmyths and truths of personal finance’. The page the commenter linked to opens with:

Dollars‘œMyth: Debt is a tool and should be used to help create prosperity.

Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe.

Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you’re in debt, then you’re a slave because you do not have the freedom to use your money to help change your family tree.’

This kind of intro is a pretty big put-off to reading anything further. First of all, the ‘œtruth’ he’s asserting does not contradict the ‘œmyth’ that he’s trying to dispel. Second, ‘œmost normal people’ being ‘œin debt up to their eyeballs with no hope of help’ is just plain false ‘“ most households have no credit card debt, despite the oft-reported $8000 or $9000 ‘œaverage’, which is also parroted elsewhere on his site. Third, the slavery analogy is just silly. You don’t go to jail for not paying debts. I’m sure creditors would love it if this were true ‘“ imagine the results of the current subprime mortgage crisis! In reality, the people who can’t pay their mortgages will just walk away with a bad mark on their credit report.

Myth: There’s a financial guru out there with a plan that will result in the best financial outcome for everyone.

Truth: Personal finance is complicated, and your own plan needs to consider your situation, your personality, your goals, the amount of time you want to spend dealing with your finances, and other issues.

I’m sure Mr. Ramsey and the other debt elimination gurus out there have helped many people get out of debt. And I know there are people out there who really shouldn’t use debt at all, because they can’t use it responsibly.

Meanwhile, many people successfully use debt to better themselves. Student loans pay off handsomely if you choose the right degree, and a mortgage is an easy way to build net worth if you go with a standard mortgage and don’t try to borrow more than you can afford. Debt can also get you through an unexpected event such as a job loss. Even huge corporations who have no real need for debt use it in their capital structure when it makes sense. Check out Exxon Mobil’s financial statements ‘“ even with between $11 billion and $40 billion in profits every year since 2000, they continue to carry about $6 billion in long-term debt every year rather than pay it all off.

Liz Pulliam Weston writes in ‘œDeal With Your Debt’, ‘œThe key to managing your debt wisely is knowing which debts are helpful to you and which will leave you worse off. You need to figure out how much debt you can realistically take on so that you don’t swamp your financial ship. You need to know when to accelerate your payments and when to pay the minimum. In short, you need to look at debt as a key part of your financial plan, rather than as a scourge that can and should be erased from your life… Ultimately, being debt-free is a great way to be. But you want to get there the smart way.’

Of course, figuring these things out is more complicated than swearing off debt entirely. Wisely using debt requires more time and research devoted to finance and a greater risk tolerance than funding your whole life with cash, and it’s certainly not as inspirational as dramatic analogies about helpless slaves. But I think most people are capable of achieving financial literacy and discipline and using debt in a productive way.

If you are intimidated by the language of loan officers, or you just can’t help but run up those credit cards, the ‘œdebt is dumb’ mantra may be for you. But contrary to what the gurus would have you believe, most of us are not the financial equivalent of alcoholics.