Thank you for taking the time to read and review my book, “Debt is Slavery”. I’m glad that you enjoyed certain parts of my book although it appears you didn’t agree with others.

Firstly, I wrote “Debt is Slavery” to help others learn from my personal struggle with and eventual triumph over debt. The book takes a unique approach to personal finance by focusing on changing the way people *think* about money. It describes 10 ideas and techniques people can use to gain control of their finances, pay off their debt, and create financial security. I know these principles work because I actually used them to get out of debt. I still use them today.

Secondly, I’d like to offer rebuttals to some of your criticisms, which I believe may be based on misinterpretations of what my book says:

1. Regarding “good debt” and “bad debt”:

You quoted the following as Very Bad Financial Advice (VBFA):

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Mihalik believes in “good” debt and “bad” debt. For someone who openly professes all debt to be slavery, I have to wonder, is there good slavery and bad slavery?

He believes that going into debt to finance your college education is “good debt” yet he encourages people with mortgages to sell their house and rent instead.

I’m telling you, parts of this book just didn’t add up to me. Personally, I don’t believe in good or bad debt. It might be better to phrase it as necessary and unnecessary debt. Mihalik would probably agree on that point, it was just phrased poorly several times throughout the book.
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Here is what the book actually states:

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Can there be “good debt”?

Debt can be “good” if it is used to buy something that will produce value and/or income in the future.
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The book lists, as examples, borrowing money for a college education or to start a business. Both of these applications of debt can produce future income, which can be used to pay off the debt.

The book also states:

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A third example of “good debt” is borrowing money to make a large purchase such as a house. (People rarely have enough money to purchase a house for cash.) However, there is a caveat that comes with this kind of debt. We must make sure that we are getting value for our money. If we overpay or overextend our finances for a house, a mortgage is not “good debt”.
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I later say about mortgages:

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Am I saying that we shouldn’t have mortgages, that we shouldn’t buy houses?

Of course not, but I want to change the way you look at debt. Mortgages are debt…

Borrowing money to buy a house can be categorized as “good debt”, but you should still focus on paying it off as soon as possible.
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I definitely do not “encourage people with mortgages to sell their houses and rent instead”. As shown by the above statements, I believe it is acceptable for people to take out mortgages to buy homes but I also clearly state that people should not buy more house than they can afford.

You may have gotten the idea that I “encourage people with mortgages to sell their houses and rent instead” from Chapter 10 where I describe how a fictional person with financial difficulties could plan their monthly finances and create a debt-reduction plan. I discuss many actions this person can take including selling their car, condo, or boat.

Believe it or not, owning a home is not always the best financial decision for everybody. I think this is clearly supported by the recent sub-prime mortgage collapse. (By the way, in the book, the person chooses to sell the boat.)

2. You made the following statement about the section in Chapter 7 that mentions stocks:

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One other bit of VBFA was this little paragraph:

“So what about stocks? Are they a good asset to own?

They can be. The right stocks can appreciate significantly and make you wealthy, but most stocks do not pay dividends and thus, do not qualify as income producing assets.”

Huh? Well, I can honestly say that the stocks I own that do not pay dividends have still been real assets. I have my dividend paying stocks in a tax deferred retirement account at present, and they haven’t really produce all that much income anyway. Either he’s wrong or I am, but I definitely consider my stocks assets. Might be just a difference of opinion, but I respectfully disagree with his assessment, and his definition of an asset.
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I agree that stocks are real assets. This is clear if you read my full statement about stocks, which is as follows:

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So what about stocks? Aren’t they a good asset to own?

They can be. The right stocks can appreciate significantly and make you wealthy, but most stocks do not pay dividends and do not qualify as income-producing assets.

Owning stock is an essential part of any investment portfolio, but investing in stocks is beyond the scope of this book. There are many fine books (and many more poor ones) on how to invest in stocks and I will defer to them.
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My statement about stocks was in the context of describing different types of “income-producing assets” that can help you “earn money without spending time”. Dividend-paying stocks produce income which, by definition, makes them “income-producing assets”. Non-dividend-paying stocks may gain value, but they do not produce income and therefore do not qualify as “income-producing assets”.

Again, I appreciate your thoughtful review of my book. I hope my comments above help to clear up any misunderstandings.

Best regards,
Mike Mihalik

Like your reviews and I think you have great content. Surprised you’re not monetizing your blog at all with ads, etc.

Would love it if you’d consider guest writing on my blog some time.