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How I think about debt

collabfund.com

341–350 of 445 posts

Re: How I think about debt

#341
post #323

Earlier quoted context omitted.

Roofs are so expensive they factor heavily into what you can sell the house for. Asphalt shingle roofs are lucky to get 20 years, cedar shingles are even worse.

In Australia, some houses have a tiled roof but most have Colorbond (galvanised, pre-painted iron). Life expectancy 70 years. Warrantied for 30 years. https://www.google.com/search?sca_esv=d265e0c6ccb16526&q=col... Not that expensive given the life of it. Mine is 15 years old and you couldn't tell it wasn't new.

I wanted that kind of metal roof, but the pitch of the roof would make it very dangerous to walk on to clean. See my other post for what I did pick.

Re: How I think about debt

#342
post #279

Earlier quoted context omitted.

> Owning… derisks housing both from an expense and sourcing perspective Except if property taxes increase beyond affordability as they have for many folks in some states recently.

Wouldn't their rent go up at a similar rate since the home owner would be copping those tax hikes anyway?

Profit

Re: How I think about debt

#343

Earlier quoted context omitted.

California limits increases in property taxes to 2% for this reason. More generally, property owners vote at a high rate, so governments will usually be less aggressive in increasing property taxes. Of course, they still go up, but it's generally less of a risk.

California’s approach privileges people who have lived in California in the past over the affordability of housing for people working today. It’s got its own popularity issues.

It’s very similar to rent control in that way.

Re: How I think about debt

#344

Earlier quoted context omitted.

If you ask a financial advisor for advice on investing half your net worth on 5x leverage in an liquid asset with one customer and one location, they'd think you're crazy.

When that one customer is "your family", it's a little bit different, though. PS: From context, I suspect you meant to say "illiquid asset".

> When that one customer is "your family", it's a little bit different, though.

I think it makes it worse.

Re: How I think about debt

#345
From a geographical socio-economic standpoint, debt is not a profit maximising tool.

In India, for example, debt is a last resort means that comes with contempt and social taboos. Yet people have no choice, but to avail debt.

Re: How I think about debt

#346

Earlier quoted context omitted.

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.

> 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. Do you mind elaborating on why this is the case? I've read and liked some of his other work (Bullshit Jobs is a great one) and I have Dawn of Everything on my reading list -- was it due to his politics in general or because of disingenuous interpretations of…

Disingenuous interpretations of the evidence and stating things as facts that are very much still debated or denied by other experts.

A good example: Graeber posits that the European Enlightenment came directly from contact with Native American ideals rather than being a home grown movement. To support this, Graeber repeatedly references a book written by a French Army officer named Lahontan about his travels in North America in the late 1600s[0]. In this book Lahontan has dialogue with a fictional Native American named Adario that is more or less a disguised critique of European society. Adario bears similarities to Iroquois Chief Kondiaronk[1]. It's thought that Adario was a literary device for Lahontan's ideas but Graeber makes a very hand wavy argument that Adario was actually Kondiaronk and the dialogue was real. Graeber then uses this as his main piece of evidence to support his theory about the origins of the European Enlightenment.

I couldn't finish the book because I kept looking up the evidence Graeber was presenting and it usually ended up like the Kondiaronk situation.

Graeber is also very condescending when he's writing about ideas held by other anthropologists (like Jared Diamond), it was off-putting and came off as unprofessional for someone who was supposed to be a leading academic.

[0] https://en.wikipedia.org/wiki/New_Voyages_to_North_America [1] https://en.wikipedia.org/wiki/Kondiaronk

Re: How I think about debt

#347
post #204

Earlier quoted context omitted.

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 r…

Well damn, can I just take out $10M in personal loans, tell them my religion doesn't believe in paying interest, buy Treasury bonds with it, and live off the interest?

Re: How I think about debt

#348
post #222

Earlier quoted context omitted.

The moral issue I have is that simply put, if I don't have the money for something, I wasn't meant to have that something. I need to earn the money for it, after which I deserve to have that something. However, the most basic clean-and-functional versions of basic necessities (food, water, shelter, and transportation) should be accessible to everyone working a full-time job, in my opinion, without having to spend oth…

Do you believe that taking investment is immoral as well, then? That access to resources should be entirely based on past work/achievements, with no judgement applied to anything to be done in the future? That does seem to be the standard you are applying to yourself, at least. (And again, I do agree that housing is incredibly overpriced in much of the world, it's just that debt vs not doesn't have much to do with it…

Investment is different. In the worst case scenario business goes bankrupt, which usually means you shut down the entity, sell off the assets, and everyone including the owners just go off and gets new jobs and live happily ever after.

Personally going bankrupt means you're now facing the possibility of actually being homeless on the streets.

Re: How I think about debt

#349

Earlier quoted context omitted.

I feel this. Unfortunately the only surefire way to avoid this situation is to be the bigger asshole.

Not the only way. You can do what Bill Gates did, and buy all the surrounding properties. In his case, some of his staff live there.

Billionaires do this - Zuckerberg did the same.

Re: How I think about debt

#350
post #6

I don't think all debt is equal, and I don't think all debt hurts your ability to handle volatility. I have a 30 year mortgage on my house with a 2.75% interest rate. That has effectively given myself "rent control"; outside of a potential rise of property taxes, my "rent" payment will not exceed a certain number of dollars. That means that if the housing prices rise rapidly, I'm covered. If I had decided not to leve…

Besides taxes, there is another sense in which outside circumstances can break your "rent control" model of home ownership with 30 year mortgage. Here in Oklahoma, insurance rates have skyrocketed in the last couple years. I now pay more in homeowner's insurance monthly than either my principle or interest payment (though perhaps not both together - yet). And I have a 4.something% mortgage. I suspect it has or will s…

> Here in Oklahoma, insurance rates have skyrocketed in the last couple years.

I thought this was only a problem in CA or FL. I wonder if this is nationwide or specific to states with disaster prone areas.

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