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How I think about debt

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Re: How I think about debt

#331

Post by unmole »

Nicholas_C wrote: post #173
lurking15 wrote: post #57

Earlier quoted context omitted.

I feel like Graeber's book is another (left leaning) fad to glom on to, like Piketty's book some years back. I found this book, The Price of Time by Edward Chancellor [1], very useful for understanding the development of money and debt over history. It's so detailed and clearly extensively researched. [1]: https://www.harvard.com/book/the_price_of_time/

Thanks for the rec. I’ve wanted to read “Debt” for a long time but I recently read Graeber’s book “the Dawn of Everything” and it bent the truth so much every which way to get to his POV that I won’t read another book by him.

Cherry picking and misrepresenting evidence to argue for his fringe political beliefs was Graeber's whole shtick. You're better off not reading Debt.

Re: How I think about debt

#332

Post by BinRoo »

Saw the title, jumped to the diagrams, and thought I knew where this was going, but I was way off. I made the exact opposite conclusion from a quick glance at the diagram - that debt gives you more freedom. It allows you to go in the red. That a safe, debt-free life leads to less volatility and therefore less ups. Then I read the article, and couldn't hold both opposing ideas in my head.

Re: How I think about debt

#333

Post by dgfitz »

paulcole wrote: post #300
beryilma wrote: post #243

Earlier quoted context omitted.

Owning a house does not mean not owing anyone a cent. You still owe multiple types of taxes to the government. You still need to get insurance. You still need to make repairs. I actually find piece of mind in renting. I can always say screw it and move to the cheapest part of the country as I am getting closer to retirement age.

> I can always say screw it and move to the cheapest part of the country as I am getting closer to retirement age. reply Something similar to this is why I prefer renting and why anyone who unshakeably believes renting is “throwing money away” is immediately suspicious to me. I’ve always tried to rent the cheapest (some would say crappiest) apartment in an area that I’ve really wanted to live. I’ve done quite well fi…

It’s just a numbers thing. Applying emotion and trust (in your words) to a numerical financial decision is naive at best. I would try to change your mind with numbers and facts, but I can tell it would fall on deaf ears/eyes.

Re: How I think about debt

#334

Post by Joel_Mckay »

cess11 wrote: post #330
Joel_Mckay wrote: post #208

Earlier quoted context omitted.

Nietzsche was a smart man that had a difficult personal story, and it is interesting to learn about his life. He was suspected of suffering neurological issues from syphilis... obviously not a particularly amusing subject before the invention of antibiotics. I never make stuff up unless it is obviously funny or someone makes me a liar... my neutral evil temperament usually ensures stoic honesty even when being deceiv…

I don't think you have learnt about his life, or read his more important books.

Indeed, German fluency has all but vanished with age.

I am beginning to suspect we no longer may communicate in English as well.

Cheers =3

Re: How I think about debt

#335

Post by zharknado »

dheera wrote: post #204
TexanFeller wrote: post #200

I have a paid off house and zero debt. Sure I might be ahead if I had used some of the cash to buy stocks instead of paying down the house early, but I’m completely happy with my decision. There is no peace of mind like not owing anyone a cent and keeping your living expenses low. Having debt was incredibly stressful and no longer worrying about making payments is the best thing that’s ever happened to my mental heal…

I never understood buying things that I can't afford. I always thought you earn money and when you earn enough money to buy something you can buy that something. That is always how I have lived life. For that reason I also find it ridiculous that it's the social norm to take debt to buy a roof to put over your head. A (simple, clean, functional) house is a basic need, not a luxury item. I always assumed that if I don…

I think halal mortgages are instructive on this point. To be clear, I’m not Muslim nor a lending expert, I just think it’s a really interesting setup.

As I understand it, sharia law forbids paying interest, so a conventional mortgage is not an option for adherents. However, several different mechanisms are allowed by which the purchaser gradually gains full ownership of the home. E.g. one is roughly equivalent to a rent-to-own agreement. The financier still gains a profit that reflects the risk their upfront investment is subject to.

What I find interesting is a recognition that some people need a lot of time to attain homeownership, and it may be valuable to let them live in the home before they fully achieve it, despite the outright rejection of lending as the mechanism.

Re: How I think about debt

#336

Post by pas »

venv wrote: post #137
lurking15 wrote: post #57

Earlier quoted context omitted.

I feel like Graeber's book is another (left leaning) fad to glom on to, like Piketty's book some years back. I found this book, The Price of Time by Edward Chancellor [1], very useful for understanding the development of money and debt over history. It's so detailed and clearly extensively researched. [1]: https://www.harvard.com/book/the_price_of_time/

Piketty's book (Capital in the Twenty-First Century) is most definitely not a fad. It is a result of serious research into historical economic data and anyone intellectually honest ought take it seriously. As anything in the social science of economics, it is subject to debate, but to call it a 'fad' is odd, to put it mildly.

serious? sure, yet wrong

they made a few mistakes, and after correctiona their findings are not reproducible

https://www.vox.com/future-perfect/2024/1/11/23984135/inequa...

https://marginalrevolution.com/marginalrevolution/2023/12/th...

Re: How I think about debt

#337

Post by brailsafe »

synergy20 wrote: post #246
Dylan16807 wrote: post #232

Earlier quoted context omitted.

I agree that house prices should come down. But given that you need a home, what's the difference between $1000 in rent+fees and $1000 in mortgage+taxes+fees? Normally the biggest difference between renting and buying with debt is that you can stop renting. But you're not going to stop having a home.

my landlord friend told me, many of her tenants earn decent salary, definitely more than her income, they can even spend $8000 or more to remodel a car or things like that, but can never save up to the 20% down payment ever.

This truth has come up quite a lot lately in conversations. It's not just the down payment though, it's like ok first I get together $120k for the down payment, then I'm on the hook for potentially double the already obscene amount the same place would cost to rent for the mortgage payment, then utils, then repairs, taxes (almost like one would need to be a landlord to afford it). Like, pass, ~$4k+ a month is more than I'd prefer to be on the hook for, and that's just a mediocre 1 bedroom condo. Doesn't help that there are no viable jobs or enough stability to ride out any volatility now that you've drained your savings on the mortgage.

Instead, a modest trip and a few gadgets is wildly less compromising and stressful.

Re: How I think about debt

#338

Post by brailsafe »

bmicraft wrote: post #247
synergy20 wrote: post #246

Earlier quoted context omitted.

my landlord friend told me, many of her tenants earn decent salary, definitely more than her income, they can even spend $8000 or more to remodel a car or things like that, but can never save up to the 20% down payment ever.

> spend $8000 or more to remodel a car > can never save up to the 20% down payment something tells me those two things are connected

Well, at that rate, one could not remodel 15 cars and maybe have enough for the down payment on a studio in some markets.

Or one could remodel a car and give up on home ownership, because it seems like a losing idea atm, and they'll have pursued something they find fruitful for the time being. At least they'll have the car in common with their boomer neighbors.

Re: How I think about debt

#339

Post by paulcole »

dgfitz wrote: post #333
paulcole wrote: post #300

Earlier quoted context omitted.

> I can always say screw it and move to the cheapest part of the country as I am getting closer to retirement age. reply Something similar to this is why I prefer renting and why anyone who unshakeably believes renting is “throwing money away” is immediately suspicious to me. I’ve always tried to rent the cheapest (some would say crappiest) apartment in an area that I’ve really wanted to live. I’ve done quite well fi…

It’s just a numbers thing. Applying emotion and trust (in your words) to a numerical financial decision is naive at best. I would try to change your mind with numbers and facts, but I can tell it would fall on deaf ears/eyes.

Yeah I don’t deny there are ways to make more money than the choice I made. How would you answer the question I asked?

> I would’ve done better financially by buying a home somewhere I don’t want to live, but what’s the point?

Few decisions are purely numerical to most people. Or rather there are many decisions people claim are purely numerical and then make suboptimal numerical decisions on.

It doesn’t make my choice a bad choice and doesn’t mean that I threw my money away on rent anymore than a homeowner threw their money away on a refrigerator, property taxes, etc.

I exchanged a small amount of money for a place to live and had money left over to spend/invest in other ways and I got to live in an area I really love.

I guess that’s what I get for being naive at best.

Re: How I think about debt

#340

Post by WalterBright »

Vegenoid wrote: post #215
WalterBright wrote: post #181

Earlier quoted context omitted.

> A house has intrinsic worth It's value is only what people will pay for it. For example, a relative of mine died some years ago. She had a house full of expensive furniture. You couldn't give that furniture away, even though it was in perfect condition. It had no value. The average estate value, excluding land, houses, and cars, is about $900. I have friends who ran an estate liquidation service. You'd net somethin…

You are thinking of worth and value only in the monetary sense, and the person you are responding to is referring to a house's ability to be valuable to individuals, even if nobody else will pay for it, because it provides them shelter, satisfying a basic necessity. This is most of where its monetary value comes from (obviously not universally true, many properties have simply become investments), and its monetary va…

> you must agree that a house has utility that is not affected by its market price

The market price is determined by how much people want it, of which utility is a large component.

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