Good vs. Bad Debt: How to Make Informed Financial Decisions 

Available for Interviews: Harry Abrahamsen

Harry J. Abrahamsen is Founder & CEO Abrahamsen Financial Group. His company offers customized wealth management solutions—creating plans and portfolios that protect, preserve, and grow client’s wealth. He was selected as one of the ten most dependable Wealth Managers in the Mid-Atlantic as published in Forbes magazine.

 

What Harry Abramhamsen Can Say
in an Interview on Bad and Good Debt
:

Bad Debt

Bad debt is buying things that you cannot afford. Racking up credit card debt to make consumer purchases or buy luxury items you cannot normally afford. Borrowing money when you do not have the ability to ever pay it back.

Good Debt

Good debt could be a home mortgage. The loan interest is tax-deductible if the primary home mortgage is $750,000 or less, providing it is a couple married filing jointly (or $375,000 if married filing separately). In addition, since we are in such a low-interest rate environment, people can get very creative structuring an intra-family loan. This will provide a higher earned interest rate than a bank would pay on a CD, supplementing their income, while allowing the person that is borrowing the money at a reduced monthly cash flow obligation. This creates a win-win scenario for both the lender and borrower.

Confusing Good Debt With Bad Debt

People often confuse good debt with bad debt because the majority of people do not take the time to fully understand all of their options. We live in a constant state of change and what worked in the past will certainty not work the same in the future. Most people are brought up learning that paying off your house quickly is a good thing, but you need to fully understand all of the macro-economic factors that play a role in determining the best financial decision.

Analyze All of the Variables

Mortgage lenders, banks, CPA’s and the Federal government all have different opinions about what you should or should not do. It’s super important to have the proper amount of liquidity and access to cash when you are having a debt conversation. What makes sense financially may not make sense emotionally. Inflation, the cost of money, interest rates, lost opportunity costs, tax deductions will play a major role when considering using debt. Sometimes debt can help you create leverage as well as create tax deductions. There are other outside-the-box strategies people can utilize to access money via loans, which have nothing to do with a bank. For example, borrowing money from an insurance company is an excellent way to access capital with no approval process. This idea not only allows you to create tremendous leverage, but also access money that is “off the radar” of the IRS and credit reporting agencies.

The First Thing a Business
Loses Access to in a Crisis

Think of all the small businesses that are facing loss of business and to not have access to a line of credit to support the survival of their business. What if they could create a line of credit where they were the loan officer that was available every time an economic disaster occurred? Wouldn’t that be a spectacular benefit? Shouldn’t small businesses know that they can create an account that provides that benefit, while providing other protections and opportunities as well? Businesses can set up and establish a life insurance policy, which can be designed to provide capital when needed. 

Take the time to fully explore all options to make informed financial decisions.

 

Interview: Harry Abrahamsen

Harry J. Abrahamsen is Founder & CEO Abrahamsen Financial Group. He has been quoted in numerous national publications, such as Forbes, On Wall Street, Financial Planning, Bottom Line Personal, Smart Money and cited in the Encyclopedia Britannica. An independent research firm has selected Harry James Abrahamsen as “The 10 Most Dependable Wealth Managers in the Mid-Atlantic” published in the Forbes December 2007 issue Investment Guide. Harry Abrahamsen has five children and resides in New Jersey.

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Jo Allison
Managing Editor
Director of Public Relations
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Jo@SuccessInMedia.com

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