"Stupid Debt"

Financial author Mary Hunt probably didn't coin this term, but her widespread use of it in her 1999 book Debt-Proof Living makes it as viable a financial keyword as any other.

"Stupid debt" is characterized by the following:

  • The borrower has no safety valve — a legally and morally sound method to get out of the obligation. (With mortgage debt, for example, the house itself may be sold and the proceeds used to pay off the lien.)
  • The debt is unsecured, with no collateral and no security deposit for the lender. The lender holds nothing that is at least as valuable as the amount of the loan.
  • The loan was for something with a reasonable life expectancy of less than three years.
  • The loan was for something that will decrease in value.
  • The interest rate is high.





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