131–140 of 208 posts
Earlier quoted context omitted.
The banks use "comps" to figure out the maximum loan value. Assuming the housing nearby as similar, their actual sale price provides the price signals markets crave.
Comps have nothing to do with loan value. Your income, credit, and assets and debt decide what your max loan value is.
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> also Student Debt cannot be forgiven in bankruptcy so you essentially have an entire generation of indentured servants who will never actually own property outright. This is an issue, but can vanish with the stroke of a pen.
A pen being wielded by a man with no desire, or knowledge, or forethought, to do so.
The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…
Yes. If anything, the bigger issue is national debt. It can be broken out into investments versus borrowing for transfer payments, but either way the #s come out much higher. And it's easier for consumers to walk away from debt in a bankruptcy than it is for a country.
At this time, the cost to the nation of servicing the debt is around what, 6 percent of income? I bet a lot of consumers (more than half) would find that to be very affordable.
The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…
The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…
>It is difficult to evaluate credit card debt because credit cards have increasingly become the substitute for cash in the United States. How much of the debt is extremely short term and essentially represents what used to be cash transactions? Indeed, I've often wondered this. If someone has an average $3000 credit card balance that they pay off in full when due, are they listed as having $3000 in consumer debt on a…
Card issuer knows whether you are a transactor (pay the entire balance each month) or revolver (carry over some of the balance and therefore pay interest on it). This is a strong risk predictor.
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A large amount of individual debt is wholly optional. What people ignore and therefor schools do not teach to be wary is that marketing is very well developed and convince otherwise rational people to make an irrational decision which has them take on more debt. from buying too much house or car to over buying an education that cannot be used where the person is or in a field that cannot withstand the costs. all of t…
My lesson in financial responsibility was to have to live on 8000--10000$/year for three years. Coming from a solidly middle class income, it was a real shock. I am very credit averse, now, since even a modest level of credit sunk as fixed cost with no benefit.
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Yes but those assets are owned by the rich. I'd wager increased debt correlates strongly with increased inequality.
Those assets, if you're referring to consumer debt, are owned by anyone with a retirement account (or pension) with financial sector stocks in it. Considering that just about any diversified portfolio probably has a broad based US equity portion, that is probably the majority of employed people.
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A house isn't an investment either though. An investment is an asset which is expected to go up in value faster than inflation. Housing prices track inflation. This is, on average, generally true; I'm not talking about a specific local market here. In order for something to be an investment, it must generate a return. After transaction costs, property taxes and other upkeep expense, the RoI of real estate is not grea…
When you buy a house, your investment basis is not the total value of the property. It is the cash outlay you make to acquire the property: the down payment, plus the delta between your monthly payment and the rent on an identical property (since you've got to live somewhere). For most people this is a lot less than the total value of the property. Which means that even if the property only appreciates at the rate of…
Incorrect. You're also paying interest on the loan, which is usually pretty close to inflation. No matter how you slice it, you're pretty close to breaking even.
Also, you're not getting paid interest on the cash outlay you make the acquire the property, which is another loss.
> Voila: the power of leverage.
Leverage is just a tool you have, that can come back and bite you. If you leverage your investment by 10X, the real increases and decreases in value (adjusted for inflation) are 10X what they would be if you had not leveraged your assets. If you lose 10K of value on a 100k house that you put 20k down on, voila, the power of leverage. You just lost 50% of your investment.
> I'm not aware of any evidence that this is true.
The longer you go in your career, the less people care which school you went to because you have a work history that people can use to more accurately judge your productivity. If you're right out of college, your degree works as a proxy to that.
For most jobs, if you've already worked in the industry for 10 years, the salary you'll receive is roughly the same with and without a college degree, and the difference is even less between "good" and "bad" colleges. The earnings over career is a red herring, where right out of college, you get an initial salary boost.
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The important thing really is the financial fragility of the American household. Millions of people know that they are one unexpected event away from insolvency. GDP doesn't mean anything to them. Consumer debt just puts them more at risk.
In the UK recently they found that almost 25% of the population had less than £100 in savings
The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…
> The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person.
Another important number: Wealth in the U.S. is ~$90 trillion, or ~$270,000 per person. That makes $13,000 in debt seem easier to support.
Of course it depends highly on the distributions of wealth and debt. $80 billion of that wealth are in one person's hands, for example; he doesn't have debt problems.