$400K is now middle class
(media.kotakuinaction2.win)
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Explain to me how me owing money to someone else is a good thing.
Bad debt is taking a vacation in Paris on a credit card.
Good debt is getting a bank loan to buy a work truck that you will use in a construction business to generate all the income you need to live and pay off the loan.
Not just interest -- if I take out a loan to start or expand a business and the money I make from that business/investment pays off more than the interest I'm paying, it's good debt.
Taking out a $5000 loan to get a commuting vehicle so that I can get myself to work is arguably good debt.
Taking out $300k worth of loans so I can party for 5 years at college and "earn" a bullshit studies degree is bad debt. Taking out a $35000 loan so that I can buy a brand new car is bad debt. Racking up credit card debt to buy a big TV or the latest iPhone or some other disposable electronics device is bad debt.
I think I've actually been successful with a couple people talking them off student debt. It's just so fucking stupid. The whole "college experience" sold and pushed on everyone is a pile of shit. Want a degree? Fine. I have one. I worked the entire way through and paid as I went at low-end accredited community and state school. It sucked. It was a pain in the ass. I had to fight some professors at times even, because they really don't like people that are abnormal. When I got that first post-college job with the about 50% pay increase, I felt like a rich man because I actually had a fresh start and didn't owe anyone anything.
And even then the low end school doesn't have to suck or be a pain in the ass. Cause the moment you graduate nobody ever gives a fuck about any of it ever again. All they care is that you checked the box.
Or you declare bankruptcy.
Also if you have a heart attack, your life might be over. So I guess you should never take out debt. Thanks for the life advice to never try anything! Also, good job completely ignoring the point about good vs. bad debt and instead just whining. I'm sure that isn't at all a reflection of your life situation. If $5k in debt is enough for your life to be over, you're doing things very, very wrong.
Also, kudos to you for managing to type up so many whinging posts with those hands you've worked bloody.
I figured it was something like that, but even then I'd rather just pay in full and own the asset. Having debt hang over my head, even if it's more cost effective, just doesn't sit well with me.
You have to set emotions aside and analyze the numbers. My current mortgage interest is around 3%. I can buy treasury bills that yield 5%. That's a guaranteed 2% profit I can earn for borrowing money on my house. And that's t-bills. I get a lot more than that from my stock portfolio. Hmm, pay off my 40 year mortgage tomorrow, or leave the money in my etrade account where in 5 years there's enough money there to buy 5 houses outright. Which feels better?
Well a great example is medical debt. I COULD pay it all off today. But why the fuck would I do that? There's 0 interest. I make more money the longer I string it along with zero downside.
Same with debit vs credit cards. There is 0 advantage to using a debit card. Use the credit card and keeping the balance at 0 has the exact same "debt" as using a debit card with all kinds of upside.
This is the difference between good and bad debt for a consumer.
Then don't be a farmer or run a business. You'll never have the $150k in liquid cash you need to buyout materials for the job that will net you a $50-75k profit.
That's good debt, it's debt that will make you money in the end.