I would first like to address some observations that I have noticed within my circle of friends.

The guy who "usually" says that debt is always bad, is the same guy that has credit card debt at 18% because he buys every gadget as soon as it comes out.

That is foolish. The interest is high and non deductible. Meanwhile the assets that he purchased with that debt is depreciating at a rapid rate.

The guy who "usually" says that debt can work to your advantage is the guy who has zero credit card debt but will borrow to invest.

Allow me to put forth an idea. The stock markets over the long term generally perform at about 10% per year. No major index outside of the Nikkei has ever had a negative 10 year return. EVER! What if you built a well diversified portfolio. Either 10 mutual funds that cover everything from small cap to large cap. US, Europe, Asia, Emerging markets etc. Or if you prefer stocks, you need to be in at least 100 stocks. Mostly blue chip and preferrably ones that pay dividends.

If you are invested in companies such as big banks, WalMart, McDonalds, Proctor and Gamble, I would argue that you couldn't lose money even if you tried. These companies are huge with enormous revenue and are essentially recession proof.

Even being conservative, lets say we average only 8% annual returns for 20 years. Lets say we borrowed $100,000 at 6% and paid interest only. The payments would be $6,000 per year. Over 20 years the cost would be $120,000. However, if we factor in the tax refunds that we get from the leverage (lets say 33% tax rate) we would get back $40,000. Net cost out of pocket over the 20 years would be $80,000.

Our investment would grow to $466,000. After we pay back the bank it's $100,000, we are still left with $366,000. Even if we factor in $66,000 of taxes, we are still up $300,000 net of taxes. If we get 10%, our net profit would be $500,000.

Long story short, as long as you don't get greedy, you can really limit your down side while still benefiting from a leverage.

The best I have seen thus far is a guy named Talbot Stevens. Do a search on him. He has a strategy of leveraging conservatively.

Someone already made a great point. Debt is not bad. Debt is bad if used irresponsibly.