"Home values have increased an average of 6.5
percent, per year, over the past 30 years," says Bach. "So
when you borrow to buy a home, chances are that's good debt. You'll
Bach heavily promotes the idea of homeownership, saying
that everyone needs to own where they live.
"About 40 percent of Americans are renters,"
says Bach, "and the fastest way to wealth in America is buying
where you live."
Bach cites some shocking numbers to back this up.
"The average renter has a median net worth of
$4,000, and the average homeowner has a median net worth of about
Manning also emphasizes what a good time this is to
build wealth through debt.
"This is the most advantageous time ever to be
in debt," says Manning, "in terms of opportunities to
get low income loans or to renegotiate or refinance."
One of the reasons so many Americans seem mired in bad debt (Bach
reports that the average American carries approximately $8,400 in
credit card debt) is that financial education is virtually nonexistent.
"This type of common sense stuff isn't taught
in school," says Bach, "and most Americans don't realize
how bad high-rate credit cards are hurting them."
Fitzgerald advises teaching your children the difference
between good debt (debt that's used to buy assets that grow in value
over time) and bad debt (debt that's used to buy things that will
lose value) early on.
Gelb opts for a more hands-on approach. "Give
your children an allowance (without strings) beginning when they're
in kindergarten, and offer them the opportunity to perform extra
jobs around the house for money. Stop buying them everything, and
teach them how to make choices with their own money-buying decisions."
The mistakes they make will help them learn and grow.
"People are getting in debt before they have
a job," says Manning. "Education is important. We used
to encourage kids to save, and that has been missed. Students now
refer to their credit cards as yuppie food stamps. They see cards
as entitlement and see they will be in debt all their lives."
Fitzgerald recommends teaching by example. Treat credit
cards like emergency safety nets and your children will likely learn
some money-management skills. "If you have to use your credit
card, immediately revise your budget, paring back on nonessential
spending. Allocate the saved dollars to a pay-off plan to bring
your debt balance down to zero as soon as possible," she says.
Leslie Hunt contributed to this story.