Off topic, but why did the creator of this site make the top bar move when scrolling? That makes it 100% impossible to read for people who use the top of the screen as a line to read along. Also, is their a chrome extension to cancel that functionality?
Anthony Bourdain on not having debt
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Re: Anthony Bourdain on not having debt
#12Debt is a manifestation of risk. As general financial advice, "don't take on debt" is akin to "don't take risks."
It depends. On a lot of things.
Re: Anthony Bourdain on not having debt
#13I wish more people thought this way. Debt can be be used effectively, but as Uncle Ben said, "With great power comes great responsibility." It seems that too much of America is wooed into a false sense of security by their ability to obtain debt without judging their ability to pay that debt off.
I agree with your sentiment, but it strikes me that there is safety and opportunity in behaving badly when the bulk of your peers are swept away in an orgy of debt fuelled spending.
Ten years ago I bought a small flat in London to live in. I paid a respectable deposit and didn't over-leverage. We were at the end of decade long property boom, there were huge concerns about the level of borrowing and ability to repay, predictions of mass repossessions if the BoE raised rates by even a quarter percent, the BoE would regularly "jaw-bone" the fact that the rate must rise[1].
The bank wanted to lend me 5x the amount I borrowed. I could have bought an entire 3 bedroom house rather than just a 1 bed flat situated in the same property. I borrowed within my bounds, priced the debt relative to an upward BoE rate, played it sensible.
What a missed opportunity! In retrospect I should have taken all the cash the bank wanted to throw at me and bought the whole house. I would have been able to manage the repayments fine, and financially I would be light-years ahead of where I am now.
All because the government will literally burn anyone to keep those vested in the housing market safe (particularly I reference the U.K/NZ/AU, I assume the U.S.A is similar).
Behave badly in droves and the government will never raise that BoE rate. They will burn savers, they will continue to inflate the housing bubble, they will set fire to the hopes of anyone under the age of 30 buying a house to live in. Literally anything to save the retirement nest-egg of a generation of baby-boomers, aided and abetted by a generation of baby-boomer politicians.
Only external factors will bring an end. In the U.K that may be Brexit (as external as that is), in AU that may be Chinese capital controls.
Until those external factors are applied you're fine misbehaving. For me, behaving respectably was a mistake.
[1] The rate today is 0.25%, an all-time historic low. The rate when I bought was 0.5%, at the time an all-time historic low.
Saving in the U.K the last decade? Sucks to be you: https://qz.com/750443/the-bank-of-england-just-cut-interest-...
Re: Anthony Bourdain on not having debt
#14I wish more people thought this way. Debt can be be used effectively, but as Uncle Ben said, "With great power comes great responsibility." It seems that too much of America is wooed into a false sense of security by their ability to obtain debt without judging their ability to pay that debt off.
I view debt as gambling against future prosperity. It's a faustian deal you make with yourself to steal your own future earnings to use today. What a bittersweet deal (most of the time)
Re: Anthony Bourdain on not having debt
#15Debt is a manifestation of risk. As general financial advice, "don't take on debt" is akin to "don't take risks." It depends. On a lot of things.
"As general financial advice"
Bordain is being very specific. This is about personal debt and being risk adverse, "I am fanatical about not owing anybody any money. I hate it. I don’t want to carry a balance, ever." The whole article is explaining his prior life as working chef.
Notice he has a lone but tries to avoid risky debt?
Re: Anthony Bourdain on not having debt
#16Debt is a manifestation of risk. As general financial advice, "don't take on debt" is akin to "don't take risks." It depends. On a lot of things.
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Re: Anthony Bourdain on not having debt
#17> Nobody likes paying high taxes, but I don’t mind.
How refreshing.
I agree with him.
Paying my taxes is a point of pride for me. It's a repayment for all those years I was poor and the government paid for me to live and go to school.
Re: Anthony Bourdain on not having debt
#18Debt is a manifestation of risk. As general financial advice, "don't take on debt" is akin to "don't take risks." It depends. On a lot of things.
Going into debt to vacation in the Caribbean (which is what he did) is not the same as using it to say start a business or get an education.
Re: Anthony Bourdain on not having debt
#19I wish more people thought this way. Debt can be be used effectively, but as Uncle Ben said, "With great power comes great responsibility." It seems that too much of America is wooed into a false sense of security by their ability to obtain debt without judging their ability to pay that debt off.
I agree with your sentiment, but it strikes me that there is safety and opportunity in behaving badly when the bulk of your peers are swept away in an orgy of debt fuelled spending. Ten years ago I bought a small flat in London to live in. I paid a respectable deposit and didn't over-leverage. We were at the end of decade long property boom, there were huge concerns about the level of borrowing and ability to repay,…
My language is a bit loose, of course the BoE is independent and controls the rate.
But the government sets the BoE remit to use the rate to keep inflation within acceptable bounds, and Gordon Brown decided to move from RPI (which includes some measure of mortgage payments) to CPI (which doesn't).
It does seem madness that we would control monetary supply without consideration of inflation in the largest asset group that lose monetary policy impacts (actual house prices, not just mortgage payments), but then I'm no economist so what do I know.
Re: Anthony Bourdain on not having debt
#20This is fantastic advice for 95% of people. If you one of the few that can manage debt responsibly, however, you'd be missing out on the opportunity for leverage. In many cases a person can effectively trade their good credit for additional returns. Of course, you need to fully understand the risk/return profile of any leveraged investment you make AND be careful not to be overleveraged at any point. It's a fine line…
I think the important thing to consider is what you are taking on debt for - are you using it for investment in something or for an expense? A house or an education is an investment - it can be a good or bad one, of course, but the idea of going into debt to obtain either of those should not be dismissed out of hand. Both can provide a return on those investments greater than the interest cost. However, if you are ta…
One caveat to this kind of thinking is that money is fungible.
One can easily pay for a vacation or years of eating at nice restaurants every day all in cash, and also go into debt for an education.
Also, one individual taking out an auto loan and a loan from Sallie Mae isn't 1 good loan and 1 bad loan. You could've foregone the high-interest loan on the big depreciating asset and used the savings to fund the education instead of the loan from Sallie Mae. In that scenario both loans were probably a bad idea, regardless of the return the education nets you.
I think another key metric beyond interest rate and rate of return, is degree of necessity. That's harder to measure though.