Best Advice: Rieva Lesonsky

I've written several "best advice" pieces (see my best advice category for details) and love to hear short takes on what financial "experts" view to be their best piece of financial advice. Over the next several days, I'll share some of these from a Bankrate article on best personal finance advice and give you my comments on them. Today, we'll hear from Rieva Lesonsky, co-author of "Start Your Own Business":

Lesonsky's best advice "was from the owner of our magazine, Peter Shea," she recalls. "He said, 'Housing prices have gone up -- get a second mortgage and pay off your debt.' I did, and I'm debt-free."

You know how I like this advice. :-)

I've been debt free (including my mortgage) for ten years now. It's been great to be without any sort of debt and I'm kind of dreading the fact that if we buy a new house, it's likely we'll have a mortgage at least for a short bit of time. It's not something I'm looking forward to.

What about you? What do you think of Lesonsky's advice?

Click here to read part 7 of this series.

Click here to read part 1 of this series.

Comments

[plonkee]

I don't think I quite follow - it sounds like a suggestion to consolidate debts and therefore not a universally good idea. (Although being debt free is pretty good.)

[Ed]

Taking out a second morgage to pay off debt is hardly becoming debt free. In fact, it is just an invitation for people to take take on more personal debt if you ask me.

[Ellen]

Housing prices in many areas are going down, not up! And a lot of people who've taken this advice are now losing their houses, because they swapped unsecured debts for secured ones. :/

[Matt]

Getting a second mortgage is just moving the debt around. I'm not impressed.

[beastlike]

Sounds good to me! If you are smart with your money, you would use the 2nd mortgage wisely!

We bought a home 4 years ago for 300k and barely came up with 10%. A year later since our house appreciated we took out a HEL to get rid of PMI. We know owe about 200k including the HEL because we have been putting extra each month towards the home loan. BTW - we also have at least 6 months of living expenses in online banks (4.75%).

I know it may be smarter to put the extra money in stock, but it's just a personal goal of paying off the home in a total of 10 years that I can't pass up. I think when we have no mortgage and can work another 25 - 30 years fully investing 401k's and Roth's, we'll be okay by the time we retire.......

Who knows, maybe in 10 years when our house is paid off and the dollar is worth nothing, the money in the stock market won't mean anything anyway.....

[Matt]

I agree with previous posters - not only is this not helping to pay off your debt - it's just shuffling it around - for a lot of people it's dangerous. They pay off their credit cards through a second mortgage, and suddenly they have all this "money" they can now spend on their credit cards.

[FMF]

FYI, the part I like above is "being debt free." If you're debt free, this conversation is moot. ;-)

[Lord]

And just think, you can pay off your car for the next 30 years! How could anyone pass that up? ;-)