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How I think about debt

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Re: How I think about debt

#431

Post by Willish42 »

Nicholas_C wrote: post #346
Willish42 wrote: post #322

Earlier quoted context omitted.

> 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 Nort…

Have you read any of his other stuff? His essay on Bullshit Jobs (https://strikemag.org/bullshit-jobs/) is a good example that isn't book-length (though he did write a book of the same name that came out later)

Here I definitely take his condescending / snarky tone with a grain of salt, but as a reader I understand it as largely a literary technique to build a narrative and suggest / propose an alternative, usually somewhat contrarian, viewpoint.

I can't at all disagree with you here re: Dawn of Everything, as I haven't read the book, but is it at all possible that -- given we're analyzing the reported history of indigenous societies and the book talks about a proposed alternative viewpoint -- some level of "matter of fact"-ness works in a similar way as a literary technique? In this context it seems impossible to truly make a definitive claim one way or the other, as we're talking about histories for groups of people (who were largely extinguished by invading colonialist armies; Guns Germs and Steel and all that...) that are no longer around in serious enough numbers to have an oral history, let alone a quasi-accurate one.

https://en.wikipedia.org/wiki/The_Dawn_of_Everything#Recepti... seems largely like reception was a mixed bag, and that while there are parts that are a bit of a stretch, most anthropologists and reviewers found it a refreshing read contrary to the "canonical" (imperialist) narrative(s) commonly taught in history class. Is it as "mixed" from your read as that Wikipedia summary says, or do you find the discrepancies/inaccuracies significantly more egregious than the way I'm characterizing them?

Re: How I think about debt

#432

Post by dehrmann »

edmundsauto wrote: post #65
dehrmann wrote: post #54

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.

But most of them would not think you’re crazy once it’s specified to real estate. This means either financial professionals are blind to the similarities or there is something critical missing from your description.

It's that people have an irrational emotional attachment to homes and financial advisors know they wouldn't be in business if they told prospective homeowner to put the money in an index fund. Where owning a home wins is it forces people to set aside income and put it in an asset rather than spend it, but there are other ways to do this.

Re: How I think about debt

#433

Post by jjav »

dheera wrote: post #420
jjav wrote: post #372

Earlier quoted context omitted.

> 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.

> Not really, you can get out of paying rent easily

And then, what?

Unless you have a backup plan which allows you to live for free somewhere, you can't get out of paying someone for it. Whether rent or a mortgage.

For housing, it is most useful to plan long term and consider you have a lifetime of housing payments coming up. How can you minimize that lifetime total?

Re: How I think about debt

#434

Post by throwaway2037 »

rqtwteye wrote: post #409
throwaway2037 wrote: post #360

Earlier quoted context omitted.

To be clear, no one is getting a 2.6% mortgage these days. Your post isn't a very good comparison. It is better to compare renting today vs taking a new mortgage today .

Where I live, rents have gone up a lot in the last two years so even with the higher interest rates owning is still competitive with renting.

    > rents have gone up a lot in the last two years
Where? In most places, rent is capped by the median income. Also, many people here are about middle income, so they are living in way above average homes. Yes, there, rents can really run away because you have higher income people, but middle class housing will barely budge.

Re: How I think about debt

#435

Post by throwaway2037 »

ehmmmmmmmm wrote: post #361
throwaway2037 wrote: post #352

Earlier quoted context omitted.

> Unfortunately housing prices are rising so fast that saving for years doesn't necessarily get you there Where? In many, many highly developed countries this isn't true. > 1M is close to 500K after taxes Woah. Where do you live where effective income tax rates are 50% for 1M+? Please don't confuse marginal ("headline") vs effective ("actual") tax rates.

In San Francisco if you make $1M as a W-2 employee your marginal tax rate is ~53% and your effective tax rate is ~47%. If you make $1M on your own the rates are even higher. (That's not including the 10% sales tax you pay on almost everything you buy with the money you have left, property taxes on property you thought you owned, property taxes landlords financially pass onto you as a renter, etc.)

Don't worry, the home prices in SF are still much cheaper than Sydney or Hongkong.

Re: How I think about debt

#436

Post by incomingpain »

sokoloff wrote: post #399
incomingpain wrote: post #397

Earlier quoted context omitted.

>You’re incorrect about what that figure is. Why then would all these countries, as websites such as your source be calculating such a useless indicator? If I am incorrect?

It's not a useless measure. Normalizing total debt against total income is a sensible way to compare countries to another. It's just not a measure that is a unitless ratio of two measures with the same units. (The unit is years [of income to payoff the debt if no further interest accrued].)

>It's not a useless measure.

Thanks for confirming that. I'll return to my original post then.

Re: How I think about debt

#437

Post by mempko »

unmole wrote: post #331
Nicholas_C wrote: post #173

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.

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

You are kidding right? Dawn of everything was a synthesis work. The amount of research it references is insane (a quarter of the book is references) How exactly would you write, an already long book, that doesn't look like cherry picking by those that disagree with the content?

Re: How I think about debt

#438

Post by mempko »

Nicholas_C wrote: post #346
Willish42 wrote: post #322

Earlier quoted context omitted.

> 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 Nort…

I honestly don't know your background. Do you have an education and training in anthropology and/or archeology? Maybe you do.

When I read the criticisms in the press and blogs about the work, I found it telling that most of the criticism about Graeber and Wengrow's book is from non-experts. While experts seem to find it a breathe of fresh air.

I personally don't have enough training and education in anthropology and archeology to properly interpret the evidence. I suspect most readers here do not. That's why it's such an important work, because it synthesizes the latest research. Turns out a lot of it is counter to a lot of contemporary works that don't rely on such depth.

Re: How I think about debt

#439

Post by GuB-42 »

vlod wrote: post #410
GuB-42 wrote: post #403

One can see cash as universal insurance. For example, if you have more than a car worth of cash in an easily accessible account, your car is effectively insured. If you break it, you can just buy another one. A car is a lot of money but insurance premiums are also a lot of money over time. And unlike a car insurance that only covers your car and only in specific cases (ex: crashes are covered but not mechanical failu…

Doesn't car insurance also cover the cost of you hitting another car. Sure I can save enough to replace my 20 year car, but not for a Bugatti (~$3M).

Yes, but I assumed you already have this, as it is mandatory in most places.

I was talking about the more expensive insurance policies that cover "all risks", including theft, vandalism, or damage to the car due to weather or accidents where the owner is at fault.

Re: How I think about debt

#440

Post by edmundsauto »

dehrmann wrote: post #432
edmundsauto wrote: post #65

Earlier quoted context omitted.

But most of them would not think you’re crazy once it’s specified to real estate. This means either financial professionals are blind to the similarities or there is something critical missing from your description.

It's that people have an irrational emotional attachment to homes and financial advisors know they wouldn't be in business if they told prospective homeowner to put the money in an index fund. Where owning a home wins is it forces people to set aside income and put it in an asset rather than spend it, but there are other ways to do this.

I think it’s a lot more nuanced than that. Leverage is great, being able to do what you want to your living space has value. It also locks in your housing costs. There are tax advantages.

It’s not just a forced savings plan. That isn’t to say it’s for everyone, but it’s important to get the nuance.

(Also, it’s not really fair to say an “irrational” emotional attachment - that attachment can generate great joy and a sense of ownership, those are real things and not irrational even if they don’t make someone more money. It’s totally rational to optimize for things outside of money!)

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