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How I think about debt

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Re: How I think about debt

#411

Post by vlod »

Night_Thastus wrote: post #115
DrPhish wrote: post #22

“Debt is slavery” is how I’ve always thought about debt, and what I’ve taught my kids.

For low-income people, debt is slavery. For high-income people, debt is a powerful tool. The vast majority of people fall into group #1 and need to treat debts like credit cards and car payments with extreme caution.

> extreme caution.

See youtube channel 'CalebHammer' [0] (he does financial audits for those that are in financial trouble) of mistakes the regular people make. It can be quite painful to watch.

[0] https://www.youtube.com/@CalebHammer

Re: How I think about debt

#412

Post by vlod »

adamredwoods wrote: post #280

Why is so much financial advice from very wealthy people who did not gain their wealth through their own advice? Ie. Most advice is retrospective.

A lot of retrospective advice can be useful. i.e. For heavens sake, don't make the mistake that I did.

Re: How I think about debt

#413

Post by vlod »

ChrisMarshallNY wrote: post #96

> they tend to share a common characteristic: they hold tons of cash, and no debt. That describes the old-fashioned company that I worked for. They are only a bit over 100 years old, but they are cheap bastards. I learned how to work quite frugally, under them.

Isn't that (or still is) the attitude at early Amazon? i.e. using doors as desks. Seems prudent. Not sure if they still do that.

I've always hated startups where I've worked, that burn through HUGE sums of money (per-profitablilty) on expensive coffee/snacks/foosball tables. I feel like proverbial old man (The Simpsons) shouting at the clouds: "You know that fancy coffee you're drinking? it's future diluted equity!"

Of course, maybe there are ranges of being "cheap bastards". :)

Re: How I think about debt

#414

Post by oooyay »

hifromwork wrote: post #391
oooyay wrote: post #114

Earlier quoted context omitted.

> I have a 30 year mortgage on my house with a 2.75% interest rate. That has effectively given myself "rent control" This only works in places with fixed property tax. When I lived in Texas my property tax went up hand over fist every year as my property increased in value and automatic reassessments occurred. If your salary remains relatively stagnant and does not increase with cost of living (most salaries are subj…

>This only works in places with fixed property tax Critically, this also only works in places that offer fixed-rate mortgages. In my country (and most of Europe I believe) they are relatively expensive and the rate is fixed for only ~5 years (after which you either change to floating or update the rate). So basically nobody considers them long-term. Damn, I envy Americans.

Are your mortgages cheaper than ours on average? I couldn't imagine doing a variable rate loan in the US. You can literally be had in a single year with a variable rate.

Re: How I think about debt

#415

Post by paulcole »

dgfitz wrote: post #406
paulcole wrote: post #339

Earlier quoted context omitted.

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 choic…

It was this comment: > 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. That doesn't seem like a rational take. Renting IS throwing money away if your goal is to maximize wealth. Paying off a mortgage early when you can get a higher % return in the market than the interest rate of your loan is ALSO throwing mone…

> Renting IS throwing money away if your goal is to maximize wealth

I never said that was my goal.

> To try and claim you're generating more wealth by renting just isn't true.

I never claimed this. I have rented and I have generated wealth, however.

> To be suspicious of everyone who makes such a mild claim is a microchasm of why the world is going to hell in a handbasket.

It's usually because these people refuse to believe there's any benefit to renting and jump to conclusions and claim I said things I never said.

I wonder if I can find an example of such a situation?

Re: How I think about debt

#416

Post by ChrisMarshallNY »

vlod wrote: post #413
ChrisMarshallNY wrote: post #96

> they tend to share a common characteristic: they hold tons of cash, and no debt. That describes the old-fashioned company that I worked for. They are only a bit over 100 years old, but they are cheap bastards. I learned how to work quite frugally, under them.

Isn't that (or still is) the attitude at early Amazon? i.e. using doors as desks. Seems prudent. Not sure if they still do that. I've always hated startups where I've worked, that burn through HUGE sums of money (per-profitablilty) on expensive coffee/snacks/foosball tables. I feel like proverbial old man (The Simpsons) shouting at the clouds: "You know that fancy coffee you're drinking? it's future diluted equity!"…

They had no problem dropping thousands, if the need was there, but they didn't suffer much, in the way of "fluff."

From what I hear, most places that have foosball tables, have about an inch of dust, on said table, because they have all their employees burning out their eyeballs.

Re: How I think about debt

#417

Post by psychlops »

Ekaros wrote: post #380
psychlops wrote: post #116

Earlier quoted context omitted.

Bitcoin is a deflationary currency.

But it also has been extremely volatile over the lifetime. And quite volatile at all points.

Not sure what point you are making? It's still deflationary. Yes, it's volatile. Could be worse, could be better. No idea what it will do in the future as the race to zero continues with major currencies.

Re: How I think about debt

#418

Post by throw0101d »

belval wrote: post #269
throw0101d wrote: post #42

Earlier quoted context omitted.

> the book “Debt: The First 5,000 Years” by David Graeber Also would recommend Money: The True Story of a Made-Up Thing : > Money only works because we all agree to believe in it. In Money, Jacob Goldstein shows how money is a useful fiction that has shaped societies for thousands of years, from the rise of coins in ancient Greece to the first stock market in Amsterdam to the emergence of shadow banking in the 21st c…

> Money only works because we all agree to believe in it. Respectfully, this is the type of true-that-sounds-deep statements that are absolutely shallow and pointless. Yes money the "paper" is not worth anything, but the same could be said of anything in an organized society. Ownership means nothing, it's just a title backed by the government which has a monopoly on violence. Ethics means nothing, it's just something…

> Respectfully, this is the type of true-that-sounds-deep statements that are absolutely shallow and pointless.

And yet people still insist on the idea that money (or, quite commonly, gold) does have some kind of intrinsic value. The statement may be trope-y, but it's a psychological hurdle that many folks can't seem to get their head around.

Re: How I think about debt

#419

Post by throw0101d »

EFreethought wrote: post #210
ochoseis wrote: post #154

Earlier quoted context omitted.

Rational Reminder is one of the _best_ podcasts I listen to right now. Love the polite Canadian vibe

I watched some of the videos on their YouTube playlist about blockchain and crypto, and while there was some good information, there was not a lot of interaction. The hosts just seemed to read from a list of questions, and they did not seem to have any follow-up questions.

> I watched some of the videos on their YouTube playlist about blockchain and crypto […]

That was a special series on the topic.

Quite often they do have a list of prepared questions, and send them to guests ahead of time so they are somewhat prepared: depending on the answers they may delve more deeply into some answers.

The hosts (Ben and Cameron) also do prep ahead of time: they read the books—and more often research papers—of the guests, and so already know to a certain extent what they're going to say before they ask. The guests' answers are more for the viewers/listeners, and give the guest an opportunity to perhaps comment more 'free-style' than what can be written down.

Re: How I think about debt

#420

Post by dheera »

jjav wrote: post #372
booleandilemma wrote: post #217

Earlier quoted context omitted.

I'm in the same spot. I'm in the middle class, I've been renting for years, and I refuse to go into debt by taking out a loan for a house. This is a societal failure.

> I refuse to go into debt by taking out a loan for a house But you are renting. While renting isn't debt, it can be helpful to think of it as debt you have to pay every month (unless you plan to be homeless). So you have 12 N (where N is the number of years you think you might still live) of rent debt payments that you are committed to pay. If you transform that into mortgage payments, at least you're building equit…

Not really, you can get out of paying rent easily, usually the maximum penalty is one extra month of rent, which won't break most middle class people.

It's not that simple to sell a house, and if real estate prices crash you're still on the hook for the several hundred thousand dollar difference.

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