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How I think about debt

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Re: How I think about debt

#421

Post by brailsafe »

jjav wrote: post #368
brailsafe wrote: post #337

Earlier quoted context omitted.

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 th…

> then utils, then repairs, taxes Remember you're paying for all these costs (+ landlord profit) when you rent.

We pay whatever they can get away with charging or increasing it to, and often have the standard utilities rolled into the number, which generally seems favorable. I pay rent, insurance, and Internet, rhe rest is rolled into to a max 2% increase per year. If they tried something excessive we'd start looking elsewhere.

Re: How I think about debt

#422

Post by CalRobert »

muffinman26 wrote: post #95
CalRobert wrote: post #21

Earlier quoted context omitted.

It might be extreme but 15 years ago he was telling people not to be so flippant about taking on enormous amounts of debt for degrees with a questionable payback and I think he was right. I always thought the snowball method was dumb but as time goes on I can see how it makes sense psychologically, even if not mathematically.

I do think the snowball method also makes sense mathematically, depending on the loan terms and what you're optimizing for. If your loans have a minimum payment and a penalty for missing a payment above and beyond interest (which seems to be common for loans in the US), the snowball method gives you more flexibility. Paying off a loan completely eliminates that part of your monthly minimum payment. If in 2 or 5 years…

You know, that's a fair point I hadn't considered much before. Thanks for sharing the perspective.

Re: How I think about debt

#423

Post by dgfitz »

paulcole wrote: post #415
dgfitz wrote: post #406

Earlier quoted context omitted.

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…

Ignored this line by me huh? Convenient. Or, to you your word, suspicious.

> To claim you're living the lifestyle you prefer, great.

Re: How I think about debt

#424

Post by paulcole »

dgfitz wrote: post #423
paulcole wrote: post #415

Earlier quoted context omitted.

> 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…

Ignored this line by me huh? Convenient. Or, to you your word, suspicious. > To claim you're living the lifestyle you prefer, great.

No, I saw it. Congrats on getting one thing not completely wrong. Go for two next time. No point in trying to be perfect all at once.

Re: How I think about debt

#425

Post by smilebot »

rKarpinski wrote: post #27

Interesting they chose to use this example of Japanese companies not having debt, when the country of Japan has the highest debt to GDP of any developed nation[1] which has contributed to its economic stagnation since the 1990s [1] https://en.wikipedia.org/wiki/National_debt_of_Japan

It is interesting because the top 5 oldest companies are Japanese https://en.wikipedia.org/wiki/List_of_oldest_companies. Their points are still valid even though the country has a different story.

Re: How I think about debt

#426

Post by smilebot »

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.

It reminded me of Berkshire Hathaway. Very old fashioned, run by sensible people, and hold a lot of cash (and very little debt%).

Re: How I think about debt

#427

Post by slyall »

dusted wrote: post #385
slyall wrote: post #294

Earlier quoted context omitted.

A house is not a zero-risk investment. Any number of reasons from Natural disaster on down could cause it to lose much of it's value or even become uninhabitable. Possibly in a way that insurance wouldn't cover. Think of people who owned houses in declining industrial cities. The local economy went bad, their house value went down and they faced a barrier to moving since they couldn't sell, move, and get a comparable…

it's still not a high risk, owning a house (that is, having paid for it, not owing any money to the bank) still leaves you in a better position than a renter, as you can basically let it burn and will still be in an easier position to get a loan for a new house in another place if you really need to

So you are saying somebody with $500k of investments is worse off than somebody whose house just went from $500k to to $200k ?

Re: How I think about debt

#428

Post by dgfitz »

paulcole wrote: post #424
dgfitz wrote: post #423

Earlier quoted context omitted.

Ignored this line by me huh? Convenient. Or, to you your word, suspicious. > To claim you're living the lifestyle you prefer, great.

No, I saw it. Congrats on getting one thing not completely wrong. Go for two next time. No point in trying to be perfect all at once.

You must be a blast at social gatherings lmao
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