Since when does living below your means involve incurring more debt?
June 14th, 2005 | by mbhunter |I checked out Money.com’s series on Millionaires in the Making, which highlights people on track to get a million bucks before age 40. The newest is Brian O’Reilly, who is a real estate investor and a self-employed consultant. His net worth, roughly, is a quarter million — certainly not bad.
What got me was that the article talked about how he lived well beneath his means, yet:
1) he carries nearly $10,000 in student loans and credit card debt;
2) his credit card debt is five times what it was when he graduated from college;
3) rather than not pay a credit card balance in full, he uses his home equity line of credit for the purchase.
Huh?
I must have missed it when accepting more consumer debt qualified as living well beneath one’s means. Even paying 6.5% tax-deductible interest through his HELOC, debt is debt — plain and simple — and somewhere, for something, he didn’t have the resources (or chose not to use the resources he had) to pay cash. That, and he apparently has added to his credit card balances since he graduated college.
Now, if he’s getting a better return on that debt than he’s paying to maintain the debt, then hey, he should get as much on credit as he can, and I wouldn’t have a problem with that. But if not, he should pay off the debt — or at least quit saying that he’s living beneath his means.
