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General => General Discussion => Topic started by: MirrorMask on September 05, 2018, 08:21:19 AM
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With all the money going around in the world, and exagerate and ludicrous amounts of money in the pockets of multi billionaires, do you think that it could be calculated how much money one could realistically need, or wealth is too much subjective to determine what constitutes "too much" for everyone?
What I mean is: say that I'm a world class footballer of the most paid actor or I invent the new Amazon / Whatsapp and I start to sweat, piss and sh!t money faster than I could count. Once I have the house I want (add a second house at the favorite vacation spot and one for the parents), the car I want, and I travel wherever I want... what more do I need?
I get the sensation that people who are "too much" rich, if such a thing can exist and be calculated, at a certain point have to "throw away" their money, because they don't know what else to do with it.
There are many retired athletes that open shops or restaurants... was that always their childhood dream, derailed because they happen to find out they're good at kicking a ball or swinging a bat, or they're just like "My agent told me to invest my money, I guess a restaurant could be fun, here's some money, now pay some people to run it and bring me back the revenue"?
Even charity feels sometimes as an afterthought. Anyone doing actual charity work is to be praised, but I think that ultra rich people do it just because they can, with a mindset of "Well, I have more money I can spend in two lifetimes... I have already three houses... whatever, I'm not a selfish person, guess I could spare some cash to help troubled kids or something".
There could be an objective way to measure what is affordable if you're rich, and what is simply too much? if you're into movies and you have all the money you need, it's fine to set up in your house a state of the art giant panel and an equally expensive audio system. You enjoy movies and TV series so you watch them with an amazing visual and audio experience. But do you really "need" to build your own cinema as big as the actual theatre where you'd go to see the movies? you like swimming, fine, get a nice pool, do you really "need" the pool to be as long as the Suez canal just because you can? if any of us DT fans become rich beyond belief, couldn't we just buy front row tickets to their shows? wouldn't inviting personally the band at our own private birthday party and pay for the stage setup in our background be just overkill, and a waste of money for the sole reason that said pile of money is there available?
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In terms of what my state and local municipality takes from me, yes.
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Certainly people can have far more money than I think is reasonable or could even begin to imagine spending. And I do think the growing gap between the ultra wealthy and the average Joe is concerning. But I'm not really sure there's anything practical to do about it. People who invent things or start companies deserve all the money their invention or company earns them. Same with athletes or actors, they make gobs of money for their team or studio and deserve a large share of it.
So, yes, I think people can have "too much" money than is probably good for them or for society as a whole. But I really don't think there's anything that can or should be done about it other than making sure they pay their share of taxes.
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This thread is going to get political really fast.
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I think it depends on whether or not you like your kids. In my case I'd need enough to be comfortable and travel to shows for the next 5-20 years. If I had a wife and 9 kids I'd want a lot more to provide for them. Assholes like Gene Simmons and Andrew Fucking Lloyd Webber, who will give their money to anybody but their kids, are a completely different thing, but I can't really begrudge them earning whatever they want.
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You talk about "too much" being more than they need. But how much do we need? Not a lot.
So even by that standard, non-billionaires, most of them have "too much" because they don't need multiple homes, etc.
But I don't like that definition of too much cause it reduces everyone to the bare minimums or makes it so subjective that it doesn't exist.
Too much is when it becomes a burden, in my opinion. When the amount of money you have is causing you more problems than it is good things, then I'd say it's too much.
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It's not for anyone to say except about yourself. Who am I to say whether Mark Cuban has "too much money"? If he wants to buy A BMW with cash, maybe. If he wants to buy BMW with cash, maybe not.
And I'll go there: the "income gap" is a construct intended to foment discord. It has no practical application other than to create envy and provide a (false) rationale for certain economic policies. It's ugly, no doubt, but it's not meaningful. The income of Americans is not a zero sum game. Jeff Bezos making $1.00 this year or making $1,000,000 this year does not directly impact the income of even one other American citizen (or world citizen for that matter).
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Yeah, of course if we go the "too much" route, having a roof over the head is already enough for everyone.
I was thinking more along the lines of how you can actually enjoy all the things money can buy. You get a super fancy house overlooking Central Park in NY, but you also love San Francisco and you buy a villa with view over the Golden Gate... well, you still have to live here or there, you have to move around several months per year to actually enjoy the houses you actually own.
Same for cars, sure, you always liked cars, now you're showered with money, fine, get 10 Ferraris and 20 Rolls Royce... you still have to drive them all, and you can drive one car at once only, what's the point in having a Ferrari in your garage at the San Francisco villa if you're spending almost all the year in your penthouse in New York?
That's what I meant also with my example about a nice audio / video system vs owning a theatre. You don't "need" a gigantic Oled screen, but if you're into movies, having a nice big screen in your entertainment room has a practical purpouse, you actually enjoy to the best levels money can buy something that you're into. Having a lifesize replica of the theatre where you usually go to see movies falls into the "Only because you can" scenario for me.
I was not suggesting that there should be a political way to intecept just the "surplus" of money, but only if there could possibly be some objective ways to quantify the point where you start to throw away money, and what could be objectively grouped into the "Only because you can" category.
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I was thinking more along the lines of how you can actually enjoy all the things money can buy.
If that was your intent, then yes, I certainly think you can have more money than you can enjoy in a practical sense. But everyone is different. It may be meaningful and valuable to multi-billionaire #1 to know he owns 25 different luxury properties around the world. Multi-billionaire #2 may get intense joy out of drinking a crazy expensive scotch while looking out over his massive collection of expensive cars even though he never drives them. It nearly impossible for me as an typical middle class American to understand how a person could enjoy that much money, but I'm sure they have ways.
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While I understand that being that rich is something that this person will never spend and I could ever understand, that person earned it. You have to do some hard work to get to that point.
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You have to do some hard work to get to that point.
Not true at all. Could have been one of your relatives/ancestors.
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You have to do some hard work to get to that point.
Not true at all. Could have been one of your relatives/ancestors.
So lets pick out the minority not the majority? Bad argument.
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Eh, yeah, sorry about that. Just pointing out it isn't an absolute.
Yes if you are amazingly wealthy you probably worked very hard to achieve that (and had a dash or two of good luck sprinkled in). Unless you are a progressive, in which case hard work had nothing to do with it.
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Eh, yeah, sorry about that. Just pointing out it isn't an absolute.
Yes if you are amazingly wealthy you probably worked very hard to achieve that (and had a dash or two of good luck sprinkled in). Unless you are a progressive, in which case hard work had nothing to do with it.
Bait much?
(That's bait with an I--I don't want to know about the TE variety)
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:lol
I just think "most" work hard for their money and only a small amount "Cough, President, cough" are born to it. Do I think they should be taxed more. Yup. I'm middle class and I take it on the chin every day.
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I was thinking more along the lines of how you can actually enjoy all the things money can buy.
If that was your intent, then yes, I certainly think you can have more money than you can enjoy in a practical sense. But everyone is different. It may be meaningful and valuable to multi-billionaire #1 to know he owns 25 different luxury properties around the world. Multi-billionaire #2 may get intense joy out of drinking a crazy expensive scotch while looking out over his massive collection of expensive cars even though he never drives them. It nearly impossible for me as an typical middle class American to understand how a person could enjoy that much money, but I'm sure they have ways.
But some of MirrorMask's premises are not accurate; you don't "move" from NY to SF. You have houses, furnished, with your shit in both places. You have breakfast in New York, you see the beautiful sunrise, and you drive your Ferrari to Teterboro, get on your Gulfstream IV, you're in San Francisco in five hours, with time change, in time for a dinner at the Embarcadero. If that's how someone wants to live their life, who are we to say otherwise?
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Bait much?
(That's bait with an I--I don't want to know about the TE variety)
Not that often, I hope :)
What does TE mean, other than the football position?
I also believe "they" should be taxed more. But I am equally hesitant about believing the government will use that increase in revenue wisely.
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Of course they won't. Government already mishandles so much. I see that in a smaller microcosm at the Wal Mart DC I work at. I ask specifically for help, the Op's manager send instructions out and one hand doesn't talk to the other and I'm constantly going back to their management asking why isn't what we talked about being implemented?
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Bait much?
(That's bait with an I--I don't want to know about the TE variety)
Not that often, I hope :)
What does TE mean, other than the football position?
It was referring to the baTE version of the two homophonic verbs.
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I think its relative. Two different people could have two very different ideas about what too much is.
For me, I make enough to survive and not worry about living paycheck to paycheck. So In my mind, I have just the right amount of money. But boy oh boy, if you talk to some of the other people in my department, they act like they are broke and starving on the streets. They also are people that go out and buy lavish cars, houses, and expensive handbags/jewelry which they really can't afford, so there you go.
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There is rich and there is wealthy. While for the former you could envision a limit to desires and satisfaction, in the latter's case money is a living working travelling entity, strongly involved in the world and the wealth of nations. At that stage how can you determine what is too much?
I don't know whether there's something as too much money, but I'm damn sure there is way too much debt.
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ANY debt is "too much debt."
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I agree. A honest not polemic dilemma springs to mind though. If any debt is too much debt, is any money made off debt too much money?
That's probably a sophism but I find it fascinating.
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That's not true. Carrying debt allows us to afford our homes, and more often than not our cars. Having debt - and managing it properly! - is good for our credit score. For many it allows us to obtain a higher level of education.
Most people don't manage their debt well, and extend themselves too far with it.
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And saving up and paying cash for any of those things is FAR superior than going into debt for them.
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And saving up and paying cash for any of those things is FAR superior than going into debt for them.
True, but most people do not have the means to do that.
Had my wife and I been forced to save "cash" to buy our house outright, we'd still be saving to this day (12 years after we bought it). In this day and age, debt is a way of life, unless you are independently wealthy, or you have inherited some sort of wealth that enables you to "get ahead." But there is a difference between irresponsible debt, and debt taken on to achieve a goal or goals, and the means to repay that debt in a timely and fair manner.
Without my education debt, I couldn't have gone to college and law school (and I'll be paying that until I am 62). Without those degrees, I likely would not have been able to have the job I have, and ultimately purchase a home, which required another debt (mortgage), which will be paid in 19 years (counting every second). As long as debt is taken on responsibly, it is not "bad."
Credit card debt, amassed when people live above their means, is another story entirely. That debt is VERY bad. And with all the stuff today on autopay through a credit card, and bonus points for this and that, people charge everything, and then realize at the end of the month they went over by 500 bucks. Then that 500 becomes a 1000 next month, etc., etc. That's the trap right there. And the only way to avoid it is to not carry a card that allows you to carry a balance, or, simply have the discipline to know how much money you can spend, and stick to it.
And it is ridiculously difficult to do. We do it, and inevitably, there are still six months out of the year we go over what we should, and I need to adjust to make sure we don't carry a balance (I refuse to be in CC debt). But it has gotten harder over the years, with the ease of purchasing.
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Well yes, but there is a difference between good/bad and better/lesser.
I am in debt to the lender on my house, but I consider it worthwhile as it provides a solid, stable home for my children, one I could never save up for and live in this area (median house price in this county $485,000). I carry the banner for "live where you can afford to live" so by that I should move, but the downside of the mortgage debt is heavily outweighed by my wife's job and our proximity to family.
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I strongly disagree with both of you, but I'm not going to argue and try to convince you otherwise. I will just say that there are absolutely ways to accomplish all of those things without debt, other than perhaps the initial house purchase (and even that can be paid off WAY early with some serious effort).
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If we can somewhat agree that a home purchase can be disregarded for the purpose of this discussion, I don't think you and I are that far off. It really should be in its own category of "purchases."
Also, working with real estate investors I see the value in leveraging debt to produce profits, provided you have a solid business model (something I am growing unsure of with my employers...)
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And saving up and paying cash for any of those things is FAR superior than going into debt for them.
What do you do as you save that $175,000 for a house? Pay rent for ten years? There's no equity being built there; no tax benefits of any kind. The debt, at reasonable interest rates, is a far better financial decision than paying someone else to make money off you.
There's nothing inherently wrong with debt; the problem is most people don't adequately handle debt, or don't properly account for it (myself included; I wish I was perfect, but I'm not).
And we haven't even gone into the discussion about when you're likely to move out after the closing costs are accounted for but before the mortgage is paid off. There's a point at which homeownership (and less often, less frequently, car ownership) is properly considered "playing with other people's money". There's a risk component to owning assets like houses and cars that doesn't properly get accounted for when saying that cash purchases are "always" better.
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I just want to say that if ANYONE feels they have too much money, I would be more than happy to....selflessly, of course....alleviate them of that burden.
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I just want to say that if ANYONE feels they have too much money, I would be more than happy to....selflessly, of course....alleviate them of that burden.
Dude, you're a psychologist, for fuck's sake! What do you think you've been training to do?
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I just want to say that if ANYONE feels they have too much money, I would be more than happy to....selflessly, of course....alleviate them of that burden.
Dude, you're a psychologist, for fuck's sake! What do you think you've been training to do?
I meant now! I'm not a psychologist yet. Doctor next year, licensed psychologist the year after (inshallah). So, for the moment, I need all that extra unnecessary money that is hurting other people. I'm just trying to help others.
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If we can somewhat agree that a home purchase can be disregarded for the purpose of this discussion, I don't think you and I are that far off. It really should be in its own category of "purchases."
No, I think we really ARE kinda far off. :lol I wouldn't agree that a home purchase should be "disregarded." I think going into debt for a home is unequivocally a bad idea. Unfortunately, the way our economy is structured, it is nearly impossible to make an initial home purchase with cash for the vast majority of us. But the fact that it is a nearly-necessary evil doesn't make it any less evil. (and, yeah, we probably actually AREN'T that far apart on that)
Also, working with real estate investors I see the value in leveraging debt to produce profits, provided you have a solid business model (something I am growing unsure of with my employers...)
I don't. "Leveraging debt" is just as dangerous as other debt "strategies." Not paying interest to a bank means keeping more of your income in the first place, which enables you to save and invest more. Which in turn stands to generate a higher net worth than any debt leveraging could.
What do you do as you save that $175,000 for a house?
Wow, where can you get a house for only $175k? :lol
There's a risk component to owning assets like houses and cars that doesn't properly get accounted for when saying that cash purchases are "always" better.
The model you are advocating for does not treat either of those as assets. If you are in debt for them and they are not generating income, they are, by definition, liabilities. But in any case, that "risk component" is what insurance is for. And since insurance on both of those items is mandatory in our country, that takes it out of the equation whether you own or are in debt.
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If we can somewhat agree that a home purchase can be disregarded for the purpose of this discussion, I don't think you and I are that far off. It really should be in its own category of "purchases."
No, I think we really ARE kinda far off. :lol I wouldn't agree that a home purchase should be "disregarded." I think going into debt for a home is unequivocally a bad idea. Unfortunately, the way our economy is structured, it is nearly impossible to make an initial home purchase with cash for the vast majority of us. But the fact that it is a nearly-necessary evil doesn't make it any less evil. (and, yeah, we probably actually AREN'T that far apart on that)
Fair enough. I need to provide a home for my kids. Locally, I can pay an $x/mo cash to rent a place, or a $y/mo mortgage to own a place that is an asset (even if I don't own it free and clear it still has value and can be sold for gains). I opted for the latter because it makes both financial and pragmatic sense to me. If developers and builders only paid with cash, there wouldn't be any homes, condos, or apartments for people to live in.
"Necessary evil?" Don't like the term, maybe it applies here, will have to think on it.
Also, working with real estate investors I see the value in leveraging debt to produce profits, provided you have a solid business model (something I am growing unsure of with my employers...)
I don't. "Leveraging debt" is just as dangerous as other debt "strategies." Not paying interest to a bank means keeping more of your income in the first place, which enables you to save and invest more. Which in turn stands to generate a higher net worth than any debt leveraging could.
At this point it's a numbers game and not worth the getting in to the minutiae. There is a point where paying interest and leveraging debt to generate profit outweighs whatever gains could be made with cash on hand.
On topic.... yes wealth is too subjective for anyone to determine what is "too much" or who has "too much." And while I may think someone may have "too much" I am not ready to consider it appropriate for anyone else to do anything about someone having "too much."
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With all due respect, anyone who thinks that debt is a universally bad idea, simply does not have a very good understanding of debt.
Are there a plethora of instances where it is a bad idea? Absolutely. But there are also a plethora of instances where it is a good idea.
Calling debt bad is like calling social media, a gun, a car, or a bible bad. They are simply tools that can be used in both good and bad ways.
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Or they may have a pretty good understanding of debt and still draw their own negative conclusions. At that point you may or may not agree with them avoiding, with all due respect, to deny their competence in the matter.
Speaking for me, I agree with you about the "universally" blanket. Still, on the micro personal level, I've always avoided debt for it's an unbearable predictment for the way I'm wired while, on the macro level, I'm afraid it has an incredible high chance to become a financial clockwork bomb. But, again, I would never dare to give universal value and extension to my opinion.
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I don't. "Leveraging debt" is just as dangerous as other debt "strategies." Not paying interest to a bank means keeping more of your income in the first place, which enables you to save and invest more. Which in turn stands to generate a higher net worth than any debt leveraging could.
I may be presuming too much here, but "risk" - which is what interest is, really, a measure of risk - isn't necessarily "dangerous". "Risk" is necessary to make money (yes, even in the case of labor for pay). I'm not saying "it's a necessary evil", I'm saying it's potentially advantageous financially. I never once ever said "risk free".
Wow, where can you get a house for only $175k? :lol
My stepson's dad bought a house about 18 months ago for $175k. Wasn't brand new, of course, but it was a nice three bedroom on a half acre. No palace here, but for the purposes of the example, trying to keep it real (and also show that even reasonable houses are likely out of reach as a cash purchase).
The model you are advocating for does not treat either of those as assets. If you are in debt for them and they are not generating income, they are, by definition, liabilities. But in any case, that "risk component" is what insurance is for. And since insurance on both of those items is mandatory in our country, that takes it out of the equation whether you own or are in debt.
But you're a lawyer; you know that terms of art often don't mean what lay people think they mean. "Liability" when you're talking about your rightfielder in baseball means "a bad thing". "Liability" when talking about Jack Russell as your singer (now; he used to be great) means "a bad thing". "Liability" in finance/accounting terms isn't "good" or "bad". From a finance/accounting level, it's a classification. (And it may or may not be related to "income generating"; the math is done on the balance sheet, not before the balance sheet. What I mean is, if you buy a $200,000 house - prices are going up in the neighborhood ;) - and appraised as such, mortgaging 80% or $160,000, you have an "Asset" of $200,000, and a "Liability" of $160,000. As that liability depreciates, and depending on how you manage your finances (this is a technicality that is different for individual homeowners versus corporate operations) you are generating equity through the sum of that depreciating liability and appreciating asset.
And I can't stress enough: on at least two levels, this is NOT what insurance is for. With the possible exception of PMI (which is not required on most mortgages) no required insurance packages cover investment loss. Most credible businesses carry insurance as that requirement you mentioned or as a catastrophic loss mitigator, but NOT as a day-to-day risk factor.
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Or they may have a pretty good understanding of debt and still draw their own negative conclusions. At that point you may or may not agree with them avoiding, with all due respect, to deny their competence in the matter.
Speaking for me, I agree with you about the "universally" blanket. Still, on the micro personal level, I've always avoided debt for it's an unbearable predictment for the way I'm wired while, on the macro level, I'm afraid it has an incredible high chance to become a financial clockwork bomb. But, again, I would never dare to give universal value and extension to my opinion.
I won't speak for anyone else, but my point (and I made it in two different contexts here as you can see) was only that some words have a connotation to them that doesn't necessarily fit in all cases. Even in your specific case - using your words, where you say it's a potential problem for your financial mindset - it doesn't mean "debt is bad", it just means it doesn't fit into your portfolio. Buying tech stock and not, say, pharmaceutical stock doesn't make pharma stock "bad", it just means it's not a viable component of YOUR investment strategy.
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With all due respect, anyone who thinks that debt is a universally bad idea, simply does not have a very good understanding of debt.
With all due respect, there isn't a modicum of respect in telling someone they don't know what they're talking about. But for the record, I think my understanding of debt is above satisfactory.
100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.
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Or they may have a pretty good understanding of debt and still draw their own negative conclusions. At that point you may or may not agree with them avoiding, with all due respect, to deny their competence in the matter.
Speaking for me, I agree with you about the "universally" blanket. Still, on the micro personal level, I've always avoided debt for it's an unbearable predictment for the way I'm wired while, on the macro level, I'm afraid it has an incredible high chance to become a financial clockwork bomb. But, again, I would never dare to give universal value and extension to my opinion.
I won't speak for anyone else, but my point (and I made it in two different contexts here as you can see) was only that some words have a connotation to them that doesn't necessarily fit in all cases. Even in your specific case - using your words, where you say it's a potential problem for your financial mindset - it doesn't mean "debt is bad", it just means it doesn't fit into your portfolio. Buying tech stock and not, say, pharmaceutical stock doesn't make pharma stock "bad", it just means it's not a viable component of YOUR investment strategy.
Exactly. I was trying to state why the "bad" caregorization was strictly limited to my subjective inclinations and beliefs. Gotta thank you 'cause you explained it way better than I could. I objected with eric42434224's first statement because, while my opinion may be perfectly wrong or not agreeable, I tend to resent the equation "you think X about Y = you don't understand Y".
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100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.
If you're using debt to purchase a home, the hit to your net worth of the mortgage is offset by the value of the house though. The immediate hit to your net worth when buying a house is really only the closing costs.
Say you had the cash laying around for a home. It would be very easy to show mathematically that you're financially better off putting down the minimum down payment and getting a mortgage while investing the rest in index funds. Especially given where interest rates are at today for mortgages. Over a 20-30 period, the investments are extremely likely to appreciate at a higher rather than the 4% or so that paying cash for the house would save you.
That being said, I agree that debt is generally not a positive thing. By having a mortgage, it means that I must have an income to pay it, either from having a job or by withdrawing from my investments. If I have no mortgage it makes it way easier to take risks with my career or retire, take time off, etc. And while the risk of the investments not making more than the interest rate of the mortgage is pretty low over the long haul, it is a risk, which many people do not like taking.
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With all due respect, anyone who thinks that debt is a universally bad idea, simply does not have a very good understanding of debt.
With all due respect, there isn't a modicum of respect in telling someone they don't know what they're talking about. But for the record, I think my understanding of debt is above satisfactory.
100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.
But, sir, if you take away the liability, in many cases you reduce the ASSET side of the ledger too. (Or look at it the other way; you can increase the asset side more than you increase the liability side; that's the trick).
Let's say you have a balance sheet like this (these numbers mean nothing other than as a place holder):
Asset Liability
Car: $10,000 $0
Goods: $25,000 $0
Investments: $50,000 $0
Cash: $10,000 $0
TOTAL: $95,000 $0
Net: $95,000
If you save money to buy a house cash, assume a rate of savings: $200 a month? $500? At $175,000, that means 29 years of savings. In the meantime you pay rent and that's a liability. Pick a number for rent: $500? $1000? On a yearly basis, that goes in the "Liability" column with NO corresponding asset (your ownership stake does not change on a lease.)
Asset Liability
Car: $10,000 $0
Goods: $25,000 $0
Investments: $50,000 $0
Cash: $10,000 $0
House: $175,000 $0
TOTAL: $270,000 $0
Net: $270,000
In 29 years, you have paid the bulk of a mortgage. Because you're not required to pay rent, for apples and apples, you get a mortgage of "savings" plus "rent". Let's say with that, you can afford a house worth $275,000. All other things being equal, after 29 years you have:
Asset Liability
Car: $10,000 $0
Goods: $25,000 $0
Investments: $50,000 $0
Cash: $10,000 $0
House: $275,000 $10,000
TOTAL: $370,000 $10,000
Net: $360,000
The exact numbers don't really matter (though they're close; $1500 mortgage payment is a $275,000 house, ballpark, depending on down payment, taxes, etc.); the "house liability" is one year of mortgage. All other numbers - income, expenditures, depreciation, inflation, taxes, whatever - are the same, so they are moot. The debt allows you to accumulate wealth faster. Yes, you're paying interest, but in the meantime, you're paying rent, which is worse, since it's SOMEONE ELSE'S interest. Plus you have the access to the equity in real time, and the increased buying power that the equity gives you.
I haven't even approached the possibility of "flipping" that house mid-mortgage to generate even more wealth, or renting out portions of your owned house to generate even more revenue period to period.
EDIT: I wrote this, apparently, while Lordrazor was writing his; we're on the same page here, but I want to highlight something in his last paragraph: none of this is absolute. My balance sheet might not work for you for various reasons. NONE of those are because "debt is bad", though. They are circumstantial factors that influence ANYONE'S investment portfolio. For many years it made no sense for me to own a house because I moved so much. That's not the same as "debt is bad".
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Yes, there is definitely too much money. A few months ago we had well known billionaire and his entourage (14 people) stay at the hotel, and on top of reserving 2 of our cooks for 24 hours a day (6 8hr shifts at 80/hr customer price), he brought 3 of his own personal chefs. This is normal for him, probably a standard hotel rider. The 4 day stay topped 100k and was a spit in the ocean for his wages. These guys can bleed money everywhere and still never go broke.
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No one benefited from that? No tips were given? ;)
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100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.
If you're using debt to purchase a home, the hit to your net worth of the mortgage is offset by the value of the house though. The immediate hit to your net worth when buying a house is really only the closing costs.
Say you had the cash laying around for a home. It would be very easy to show mathematically that you're financially better off putting down the minimum down payment and getting a mortgage while investing the rest in index funds. Especially given where interest rates are at today for mortgages. Over a 20-30 period, the investments are extremely likely to appreciate at a higher rather than the 4% or so that paying cash for the house would save you.
That being said, I agree that debt is generally not a positive thing. By having a mortgage, it means that I must have an income to pay it, either from having a job or by withdrawing from my investments. If I have no mortgage it makes it way easier to take risks with my career or retire, take time off, etc. And while the risk of the investments not making more than the interest rate of the mortgage is pretty low over the long haul, it is a risk, which many people do not like taking.
Okay, but we said we were going to disregard primary home mortgages.
But even in your model, while it might technically be correct from a purely mathematical standpoint, can you tell me that you have actually done that? Or that anyone you know has? (i.e., had the cash lying around to pay cash for a home, but instead put down the minimum and invested ALL the remainder in an index fund) In general, people don't. But if we look at actual behavioral and spending models for what people actually do, I think you would find that ALMOST always, people who put down a minimum on a 30 year mortgage and do not pay it off early do not otherwise invest wisely and have a substantial net worth to offset even the compound interest they paid over that 30 years (and the other debts they likely amassed). In contrast, you will find that most who take out a 15 and pay it off early, which then frees up more income to invest while they are still in their earning prime, come out with substantial net worths because they simply had less money going out the door to the band, and also because they likely also had the discipline to be investing in things that would yield returns in the interim.
And that's a home. Which appreciates. And which we said we were disregarding. But apply that to other things that people can (but usually don't) save up and pay cash for, like cars, which DO depreciate rather than appreciate.
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Okay, but we said we were going to disregard primary home mortgages.
I didn't catch that, sorry. But honestly the same argument can be made for any low interest debt. Student loans, car loans, etc are often way below expected gains in the market.
Probably doesn't happen very often that people take out loans for things and invest the cash instead of just paying cash for the thing. But the same logic applies to paying off the mortgage faster than the minimum payment. I would be essentially getting a guaranteed 4% return on the money I spend to pay down my mortgage faster than the minimum, whereas historical returns from the stock market are closer to 10%.
Personally, I am focusing on maxing out my retirement accounts (401k and Roth IRA) before I start to pay off my mortgage or car loan faster than the minimum for this very reason. In the long run I'll end up ahead. But I will eventually start putting more toward my mortgage since I plan to be financially independent hopefully in the mid-50s if all goes according to plan. Hard to be independent if you're dependent on a bank for a loan.
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Hard to be independent if you're dependent on a bank for a loan.
Exactly. :tup
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I'm sorry; I missed the exclusions too. But I will add that "poor discipline" or "human nature" (depending on how you look at it, glass half full, glass half empty) don't elevate to "debt is bad".
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With all due respect, anyone who thinks that debt is a universally bad idea, simply does not have a very good understanding of debt.
With all due respect, there isn't a modicum of respect in telling someone they don't know what they're talking about. But for the record, I think my understanding of debt is above satisfactory.
100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.
Well first, there absolutely IS respect in telling someone that they are incorrect. You changed it to "telling someone they don't know what they're talking about". That might be taken as disrespectful. But that is not what I said. You used absolutes, and I merely pointed out that you are simply incorrect. No disrespect there.
Second, if you think that debt is universally bad 100% of the time, then I must disagree that your understanding of debt is indeed above satisfactory. In fact it shows a very over-simplified understanding. But that is really OK. You are a Lawyer by trade, and most people do not understand debt, and its uses beyond their own personal experience with credit cards.
You seem to think that paying for something with cash is always better than credit. I would say that may absolutely be true in most cases....especially when viewed through the lense of your own personal experience. Does it make sense to finance that TV when you have cash? Of course not. And with most transactions normal people deal with, that holds true. But those transactions are not the entirety of what Debt entails.
Thirdly, and lastly, you ask me to give you a real world example where debt is the correct choice. I absolutely can give you many. However, you seemed to have moved the goalpost in your request. You now ask :"100% of the time, debt on your ledger subtracts from your net worth, which also usually results in less available income to save, invest, or give. That's simple math. If you can show me an instance from your personal experience where that is not the case, I will gladly retract.". Regardless, I will respond:
-Debt is always offset by the asset it purchases, so it does not always decrease net worth. In many cases the value of the assets, or future revenue, more than offset the debt on the balance sheet.
-Debt can actually create MORE liquidity on the balance sheet that can be used for savings, investments, giving. it can allow for GREATER cash flow to be used for other things. If you used the cash, you would have LESS cash for those purposes, and less for expenses and emergencies.
So I answered your question....though the question didnt make much sense.
The ACTUAL question was....can debt be GOOD? Or, can debt be the CORRECT choice?
The answer is 100% YES it can be.
Here is the example you asked for, and I will expect your retraction. I deal with specific examples like this on a regular basis.
Joe Smith has a company. Joe has revenue of 2 million a year selling widgets. He has been in business 10 years. Slow and steady growth. Has 500k in the bank in cash.
Joe lands a contract for $1 million a year, but he does not have the capacity to fulfill that order. He has the ability to grow his revenue 50%, but does not have the cash, raw materials, machinery/equipment, or facilities to fulfill that order.
Joe goes to a financial institution to get a line of credit, to make sure he has the cash flow to support the operations for short term periods...usually the time from when he orders raw materials to when he gets paid on his receivables.
Joe also gets a term loan to finance the new upgrades to facilities, equipment, hiring new employees, etc. to support the new business.
Without leveraging debt, he loses the ability to grow his business. The interest incurred is a non issue compared to the increase in revenue for his business.
If Joe even can pay cash for all that growth (which is very rare), Joe then cant pay his employees or suppliers as he now has no cash.
DEBT allowed Joe to spread the cost of his expansion over say 5 years, which allowed the business to grow 50%.
Without the debt, that opportunity is lost. If he uses cash, he does not have enough cash flow to keep his company running, much less for emergencies.
Leveraging debt allowed Joe to take advantage of an opportunity to expand that would be otherwise unattainable, or by paying cash put his business and employees at high risk.
Maybe Joe has a very seasonal business. Maybe Joe has no revenue for large periods of time, so he uses a Line of Credit for short term financing. Keeping the doors open for the 6 slower months to pay his employees, until his receivables come in. It allows him to keep some liquidity available for emergencies as well.
Maybe Joe Finds out he can get a 10% discount if he can increase the size of his order from his supplier and pay cash upfront....instead of the smaller normal order with 30 days net.....but he doesn't have the cash flow to cover it. So if he gets a line of credit to pay for the much bigger order of raw supplies, he may pay 4% interest, but saves 10% on the supplies? Joe just netted 6%.
I hope these examples makes sense to you.
This is similar to the debt capital markets. Why do you think companies issue bonds? They need access to capital (cash) to use to expand/grow/operate their business. If they can get a 20% return on this borrowed cash at 5% interest.....is it better to get no return because they dont have the cash to use? Also, there is another positive effect of debt....to the people who own that debt. Bonds are a great investment for a lot of people for a variety of reasons....be it a fixed income, or a hedge to equities, etc.
I hope this example shows you how very important debt is, and how it can be used in a positive manner. In many cases it is a simple necessity.
If you can leverage the debt, and have your return be greater than the cost of that debt, then it is SIMPLE MATH that Debt can be good.
You seem to think that debt is always used to buy some consumer product that depreciates. In that one view you are mostly correct that debt is not the best course of action.
But there are a plethora of scenarios where debt can buy OPPORTUNITY and many other positives other than a depreciating consumer product. That is where you seem yo have blinders on.
I agree that there are many bad ways to use debt, but that is not what you asserted. You said it is always bad...I'm simply, and respectfully, showing that you are wrong.
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No one benefited from that? No tips were given? ;)
Actually no, no cooks received tips. I'm sure the room service waiters did very well, but we just made our hourly wages.
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Eric, you gave hypotheticals, not examples. Those are not the same thing.
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Eric, you gave hypotheticals, not examples. Those are not the same thing.
Seriously? Businesses actually do those transactions every day all over the world.
They use Term Loans, Lines of Credit, and issue Bonds....for very positive, and most times necessary reasons, with positive results.
This is not secret....it is common knowledge to anyone with an above satisfactory understanding of debt.
It is easily verified with a 2 second google search.
I am not sure what exactly you are looking for in an example.....do you want me to give you a real world example with a real company, real people, tax returns, financial statements, and applications? I think that requirement of a literal example is just being purposefully difficult.
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I know in my case that my net worth would be less had I contributed more money toward my house and less toward my retirement savings. That money has grown at a rate faster than my mortgage rate, and likely will over the next 30 years.* Mortgage debt has allowed and will allow me to have a higher net worth than saving and paying cash. Debt is good in this situation, with little risk.
If i used that money for consumption spending, the benefit of mortgage debt would disappear.
*given the fact that the stock market has not lost real value over any 20 year period (https://archive.nytimes.com/www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html) (except for 1961-1981, which lost money when taxes and inflation are included).
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Eric, you gave hypotheticals, not examples. Those are not the same thing.
Seriously? Businesses actually do those transactions every day all over the world.
They use Term Loans, Lines of Credit, and issue Bonds....for very positive, and most times necessary reasons, with positive results.
This is not secret....it is common knowledge to anyone with an above satisfactory understanding of debt.
It is easily verified with a 2 second google search.
I am not sure what exactly you are looking for in an example.....do you want me to give you a real world example with a real company, real people, tax returns, financial statements, and applications? I think that requirement of a literal example is just being purposefully difficult.
Well Bosk? Do you need a literal example, or can you just accept Debt can Good with the examples I gave?
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"Well bosk" what? I asked for specific examples from personal experience. I am not interested in debating hypotheticals with tons of variables that we are incapable of knowing.
And as I also said in my post back on page 1, I'm not really interested in trying to convince other people anyway. I have my own strong opinions on what constitutes individual financial responsibility and what does not. If you disagree, that is between you and...well...not me. :lol Have at it. Just don't expect me to think it is financially sound.
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"Well bosk" what? I asked for specific examples from personal experience. I am not interested in debating hypotheticals with tons of variables that we are incapable of knowing.
And as I also said in my post back on page 1, I'm not really interested in trying to convince other people anyway. I have my own strong opinions on what constitutes individual financial responsibility and what does not. If you disagree, that is between you and...well...not me. :lol Have at it. Just don't expect me to think it is financially sound.
Well I don't really care if you try to convince anyone. That isn't what you asked me to do. You said you would retract if I gave an example....and that is clearly what I did. If you want to play a game and make it so it is a "real life" example, I guess I have no problem doing just that.
I also understand what you may have your opinions based on what you think constitutes individual financial responsibility.....(and perhaps that is part of the problem, as you are basing your position only on one aspect of personal debt).....but you clearly posted that debt is a bad choice because MATH.
I merely showed you that there were many reasons to use Debt in a positive and productive way, well because MATH.
Perhaps also, I think that you may simply not understand what I post. You may not have any experience with Businesses using Debt. Maybe you dont understand the term hypothetical....it means dealing with theories or guesses. I gave examples that weren't hypotheticals....they were merely examples, using laymans terms and rounded figures to give examples that are easy to digest.....they are examples of transactions that actually take place...not hypothetically take place. They were generalized examples of the uses of debt in every day and extremely common scenarios....that take place every day, all over the world.
That being said, I can use this as an opportunity to educate. Most people think Debt is "bad". In many cases it most certainly is. From the limited perspective of someone whose only exposure is Credit Cards and Mortgages, I can see why they may have a negative opinion. Consumer Credit Card debt, and the Mortgage Crisis of a decade ago can certainly cast a shadow over ones opinion.
However, saying all debt is "bad" just shows a lack of understanding. Debt is no more "bad" than a Hammer is "bad". Debt is simply a TOOL to be used. If it is not used properly, there can be negative consequenses. You yourself have to disregard primary home mortgages, as you know they have benefits. One place where debt can be used positively is with Business.
As I discussed before, the uses of Lines of Credit, Term Loans, and Bonds (among others) are great debt tools when used properly.
Now for the actual, real life example you requested:
One client of mine owns an engineering firm in the greater Ft. Lauderdale area. His focus is on the design, construction, and installation of fire suppression systems in large commercial and residential buildings. Like huge corporate complexes and high rise condo buildings. He does about 5MM in revenue a year, but has done up to 7MM in years past. He has about 20 employees.
He came to me as he had a few issues financially. First, he does a lot of government contracts, and they take a LONG time to pay. He said that sometimes he has to wait more than 6 months to be paid after job completion. So he is out 6 figures for design work, materials, payroll, permits, fuel, etc. for not only the year it takes to complete the job, but then maybe 6 months to get paid. As he obvioulsy has overhead and several other jobs going on at once, this is an issue. We set up a 250k Line of Credit, secured with the equity in his owner occupied commercial property, and this LOC can be accessed to pay expenses for the job until he gets paid. He pays interest only, then pays it back with the funds from the job. This allows him to take on jobs, even though he does not have the liquidity to fund them, and keep his business going.
He also just won a contract with a national developer to do the fire suppression systems for 3 new high rise luxury condo towers in three different FL locations. He did not have the capacity for this....not enough liquidity, not enough manpower, and not enough equipment. We did a Term Loan for him to buy new equipment to manufacture the systems, as his current equipment cant handle the new capacity. We also financed three new trucks for the foreman at the three locations. It will also allow him to hire another engineer and six new installers.
If he didnt get the loan to expand, he would not have been able to go after this new contract....which may not just get him business for the next few years, but be a HUGE expansion of the business going forward with this National developer. The term loan made this business expansion possible. This is how Businesses do business, expand, and grow.
He is running a 15-25% margin on jobs, depending on type....so paying a point over prime on debt is 100% fantastic if it is instrumental in allowing you to secure those jobs. That is simple MATH, not an opinion.
I will also be speaking with him, now that he has the large contract with the national developer, to re-negotiate his trade terms with his large suppliers. By accessing the capital he has through the bank, he can get better terms, whether it be getting a discount for order size or bulk, or by paying cash instead of Net 30. This will allow him to net more profit on each job by leveraging debt to pay for supplies, and grow his business. Math.
I know that was a lot, but you asked for it. I actually hope you begin to see that debt is a tool to be used, and that there are many uses for debt outside your limited exposure or experience.
If you have any questions regarding this example, please feel free to ask. I would be glad to go over anything you like.
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In defense of Bosk's opinion on debt, it really depends a lot on what you value. I personally value having more money over debt freedom, but I can completely understand why someone would look at it the other way. Not having debt (even low interest debt as we've been discussing) makes your monthly cash flow much better. It makes it easier to survive a job loss or reduced income. It allows you flexibility in a way that having more money tied up in an investment account usually doesn't.
By the numbers I will almost certainly end up with a higher net worth focusing on investing over paying off my mortgage, but there is one situation where it could all fall flat. Say the bottom drops out of the market and home values drop again. I get laid off because my company is making cutbacks due to the poor economy. Now all my investments lost 40+% of their value, I have only unemployment as income and I lost most of the equity in my home. I still need to come up with the cash monthly to pay my mortgage. I am going to be extremely cash strapped. If this goes for more than 6 months or so I'm in a position where I may lose my home. Tapping my investments to save the house is a possibility, but I'd be pulling out at the bottom of the market, which is a terrible thing to do. I have no equity to tap to help me through this lean period. Now if I owned my home free and clear, my monthly expenses are much less and the loss of income stings way less. I will almost certainly be able to keep my home even in a prolonged jobless state. I can even tap the equity if I really need to.
So really, paying off your mortgage (or other low interest debt) early is almost like an insurance policy against when times are tough and the stars align in a negative way. I completely understand why people would value this more than having a higher net worth.
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Agreed. The use of debt in any fashion requires a thorough analysis of the potential risks and benefits. That was my point being that Debt is merely a Tool. If you personally don’t like how it’s used, that is anyone’s prerogative. However, to say that Debt is universally a bad idea, well that is simply false.
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I don't see anything wrong with things often called "good debt" such as a mortgage. It's better for me to be paying that every month than paying for rent. And while of course it's better to pay cash, it's also not easy to save the cash necessary if I am paying rent. Of course there are things I can do to help myself here like live a lower quality life or try to live at my parents. But as an adult, I'd rather take care of myself and a mortgage has helped me to do that while building up every month more equity.
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After attending ProgPower I can safely answer this question with a resounding NO. :lol
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Not to beat a dead horse, but here's a pretty good article on why paying off your mortgage early is not as great as you think.
https://www.msn.com/en-us/money/realestate/making-extra-mortgage-payments-not-so-fast/ar-BBNhf5j?li=BBnbfcN
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Not to beat a dead horse, but here's a pretty good article on why paying off your mortgage early is not as great as you think.
https://www.msn.com/en-us/money/realestate/making-extra-mortgage-payments-not-so-fast/ar-BBNhf5j?li=BBnbfcN
:tup Good article that raises some good points.
I'm not going to dismiss it because (1) as I said above, while I firmly believe that, as a general rule, going into debt is generally always a bad thing, I was exempting primary residence mortgages from that and take a bit of a softer stance on that because it is generally a necessity, and (2) the article does raise some good points.
It is a good article. But that said, a couple of points:
First, this:Each regular monthly payment you make applies to the next payment due, and any extra payment applies to the last payment due.
This is true, but it misses the point of paying off the mortgage early. That is certainly true the way most banks handle their mortgages. And someone who just pays extra without specifying where it goes will unknowingly or knowingly fall into this trap. But this statement in the article seems to assume that this is ALWAYS what happens when you pay extra (it assumes that because a lot of the "negative" consequences the article discusses flow from this very scenario). But it ignores the fact that, most often, the smart way to pay down a mortgage early is to specify that the extra money be devoted to principle, not an early payment of the next mostly-interest payment that is due. Paying down the principle avoids many of the "negative" consequences cited in that article.
Second, that writer has a bias. And the fact that he plugs refinancing at the end of the article is a tell. A refi can be great and save money for those disciplined enough to pay off the mortgage early and stay at or above their payoff pace on their current loan. Otherwise, the saving of money is a bit of an illusion because while it lowers the monthly payment (assuming you are doing a refi to get a better rate), it resets the clock on the either 15 or 30 year term. Which means the bank makes money. That line was a bit of a tell, and caused me to look him up and see what he does for a living. That doesn't mean to disregard what he is saying. Again, he makes some good points. But, as with all things, be aware of the bias and take what is said with a grain of salt, as necessary.
Third, he rightly cites many of the advantages of paying of a mortgage early in the section that follows his statement that "There are some valid reasons someone might want to pay off their mortgage early." :) As a general rule, those will usually outweigh the negatives he cites (and, again, many of those negatives simply vanish when they early payoff is done properly rather than in the manner the article assumes).
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Third, he rightly cites many of the advantages of paying of a mortgage early in the section that follows his statement that "There are some valid reasons someone might want to pay off their mortgage early." :) As a general rule, those will usually outweigh the negatives he cites (and, again, many of those negatives simply vanish when they early payoff is done properly rather than in the manner the article assumes).
I think this is really where personal thoughts/beliefs/emotions come in because I would say in general, the method that leaves me with the most money in the end is the best one, which almost certainly would be not paying off the mortgage ahead of schedule and investing. Ultimately, there is no wrong thing to do, investing versus paying off debt. Both are going to get you ahead in the long run and both are significantly better than spending more money on crap that brings fleeting happiness.
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Bosk, seeing how you are still engaged with this thread enough to research a writer of an article, have you taken any time to digest my post? I hope it wasn’t too much to take in, which it can be if you are unfamiliar with the use of debt in business. Just let me know if you have any questions and I will be happy to address them
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I think this is really where personal thoughts/beliefs/emotions come in because I would say in general, the method that leaves me with the most money in the end is the best one, which almost certainly would be not paying off the mortgage ahead of schedule and investing. Ultimately, there is no wrong thing to do, investing versus paying off debt. Both are going to get you ahead in the long run and both are significantly better than spending more money on crap that brings fleeting happiness.
That's exactly - and I'm not criticising the discourse here in any way - where I was ideally placing the discussion when I first came up with "too much debt". I'm no hypocrite (at least I try); I pay people to manage my money/assets and I know contracting/buying/selling debt is heavily involved in their task, not mentioning said money comes my way from companies that simply wouldn't exist without the notion of debt. Hell, being the nations' deficits as they are, I had public debt to my name the instant I came to the world.
The philosophical side of the matter (a horse very still alive and unbeaten) fascinating me would be - imo - Is it "puts more money in my pockets" reason enough to peacefully define debt as a good thing? Is my "right to pursue happiness" reason enough to accept a way of life based on giving up indipendence in order to get more than I can afford instead of enjoying what I can? If we're all paying "later", who's paying when someone demands his pound of flesh "now"?
Honest questions.
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Bosk, seeing how you are still engaged with this thread enough to research a writer of an article, have you taken any time to digest my post?
Yes, it was easy to digest. But for reasons I have already posted, I'm not interested in engaging on that.
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Bosk, seeing how you are still engaged with this thread enough to research a writer of an article, have you taken any time to digest my post?
Yes, it was easy to digest. But for reasons I have already posted, I'm not interested in engaging on that.
You asked me specifically to give you personal examples in order to retract, did you not? To me that is being engaged. You then ignore or dismiss it with no reason? That does not show the type of behavior you, as a mod, expect from everyone else here.
I showed you specific support for my position (which is easily going with a quick google search). If you disagree, then show some evidence to the contrary. If you admit debt is a tool that can be used positively, then just admit it and move on. Don’t ask for proof, get it, then ignore it. That is just poor form.
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Eric, quit baiting. I told you from the get-go that I was not interested in debating the issue or trying to persuade anyone. There is no "behavior" issue here. I am not interested in debating you. T
hat said, I did say I would "retract" (not further debate), but only IF you could provide a specific example from your personal experience. You didn't. You provided a hypothetical. When I pointed that out, you again failed to provide a specific example from your own personal experience and instead provided an example of a client. I have no idea whether you are intentionally avoiding providing what I asked for or simply don't understand the request, but either way, I'm not interested in debating it.
Not sure why you are so intent on debating someone who has no interest in debating you, but I find it to be very odd behavior. So going back to the "behavior" issue that you mention above, declining to engage someone that a forum member does not want to engage is not in any way looked down upon. On the contrary, when someone insistently pursues another forum member who does not want to engage or be pursued, the general advice we give is to try to ignore that user and/or to use the "block" feature, if applicable. Unfortunately, as forum admin, I have to be able to keep track of all things going on on the forum, so I don't have the luxury of blocking forumers whose posts I find harassing or out of bounds. That's just the way it is.
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Is it "puts more money in my pockets" reason enough to peacefully define debt as a good thing?
I personally think it is. As others have said, debt is a tool. There are risks involved with taking it on, but if done right you can come out ahead using it. Businesses use debt all the time to grow their bottom line, why can't we as individuals? Of course I'm talking about debt used to purchase appreciating or revenue generating assets here, not credit card debt.
Is my "right to pursue happiness" reason enough to accept a way of life based on giving up indipendence in order to get more than I can afford instead of enjoying what I can?
For most people it is. They're willing to live life on the edge of financial ruin in order to pursue what is ultimately mostly fleeting happiness from buying things. For me, I am only willing to go into debt for my home, my education (paid off a few years ago now), and modest used cars (though hopefully I'll be paying cash from here on out). Most people don't think of debt as giving up independence though. I would guess if you asked, they would say loans and credit cards give them the freedom to buy what they want.
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Eric, quit baiting. I told you from the get-go that I was not interested in debating the issue or trying to persuade anyone. There is no "behavior" issue here. I am not interested in debating you. T
hat said, I did say I would "retract" (not further debate), but only IF you could provide a specific example from your personal experience. You didn't. You provided a hypothetical. When I pointed that out, you again failed to provide a specific example from your own personal experience and instead provided an example of a client. I have no idea whether you are intentionally avoiding providing what I asked for or simply don't understand the request, but either way, I'm not interested in debating it.
Not sure why you are so intent on debating someone who has no interest in debating you, but I find it to be very odd behavior. So going back to the "behavior" issue that you mention above, declining to engage someone that a forum member does not want to engage is not in any way looked down upon. On the contrary, when someone insistently pursues another forum member who does not want to engage or be pursued, the general advice we give is to try to ignore that user and/or to use the "block" feature, if applicable. Unfortunately, as forum admin, I have to be able to keep track of all things going on on the forum, so I don't have the luxury of blocking forumers whose posts I find harassing or out of bounds. That's just the way it is.
I’m not baiting.
If you don’t want to debate, then don’t ask someone for proof of their position, then move goalposts, then just ignore valid and verifiable facts.
I thought you might actually be interested in information that could change your mind. If you want to remain ignorant of debt tools used by business, that is your perogative. I will not engage with you further on the subject.
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EDIT: Nope, nevermind. Just nope. :rollin
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LOL, I can't believe people have the time to argue such nonsense. Paragraph after paragraph. I'll just give a definitive answer to the subject question by saying no. There is no such thing as too much money because the more some people have, the more they want. Even millionaires who live beyond their means will always want more. It's just that simple. However, there is too much greed.
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My opinion is yes.....If the amount of money you have is directly causing more bad than good in your life, then you have too much money. That is an assessment to be done on an individual basis in regards to ones own wealth.
In a vacuum, I would say no, as there is no fact based amount that is too much
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My opinion is yes.....If the amount of money you have is directly causing more bad than good in your life, then you have too much money. That is an assessment to be done on an individual basis in regards to ones own wealth.
In a vacuum, I would say no, as there is no fact based amount that is too much
Yea true. Everyone is different, it comes down to how you handle the money you have. Mo money mo problems, but if those problems are becoming too much, then maybe you have too much money. I'm just really speculating though, I can't really imagine a life where money became somewhat meaningless, but I can only imagine things change immensely compared to how I live my life and what I am used to/understand.
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My opinion is yes.....If the amount of money you have is directly causing more bad than good in your life, then you have too much money. That is an assessment to be done on an individual basis in regards to ones own wealth.
In a vacuum, I would say no, as there is no fact based amount that is too much
I couldn't of said it better myself.
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No. Never enough. It's what you do with your wealth that matters.
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Well, my family just bought a new car and this topic came to mind. Costs around $23k or so. There's no way we can keep that amount of money at once and pay it upfront. We can only put $3,500.00 as a down payment and set our monthly payments at $370.00 a month for 60 months to get it paid off. So yes, we created a debt for ourselves but it is something that I can pay off myself month to month without any issues, but at least, we got a car that we really needed that should last more than five years, so it all works out in the end.
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There's no way we can keep that amount of money at once and pay it upfront.
Well, you could. But I think you are confusing "it's hard and would require a drastic change in our lifestyles and spending habits" with "there's no way we can." I can't remember the last time we had a car payment, and it has freed up a lot of money, not to mention freeing from the stress of making ourselves slaves to a lender. We have bought quite a few cars during that timeframe that have lasted longer than five years, with one exceptions (and I knew we were pushing the envelope possibly a bit too far by going with a $3700 2004 Civic, but we rolled the dice).
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Absolutely you could. I could pay cash for a $23k car. Not meaning to brag, but just pointing out that a single income family such as us, who prioritizes saving over spending, can have significant savings. Now, I wouldn't pay cash for a $23k car because it would drain my emergency fund. I would also never pay $23k for a car, but that's another story. I fully intend to never take out an auto loan ever again once our last one is paid off in a couple years.
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Oh, certainly. :lol Yeah, the cars we have bought in that timeframe weren't near $23k either. They may have been if new. But we paid nowhere near that. Nor would I, for the reasons you mentioned. :tup
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My vehicle now I bought from a family member is a low miles 2005 Ford Escape and I paid $2000 cash for it and put another $1000 into new tires and a couple minor repairs. So that shows my priority with vehicles. We buy newer (but still used) and nicer vehicles for the family mini-van so we have at least one very reliable vehicle. But even then I will hopefully pay cash for in 6-8 years from now when we need a new one.
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Yeah, sounds about like our approach. My oldest is almost old enough to get his permit, so we need to start thinking about a car for him. Our deal is, whatever he saves up for a car, we will match. I think that is a good compromise for him to have some skin in the game and take ownership rather than just getting gifted a car, but helps him shoulder that financial burden at an age where he couldn't probably do it himself. I am hoping to find something along the lines of what you mentioned--something fairly reliable and inexpensive in that price range.
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That's a really good idea for paying for your kid's car. I may have to steal that one in 7 years when my oldest is at that age.
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Along the same lines of "it's just not possible to save enough money to pay cash for a car", I'm very much surprised at how many of my fellow 30-somethings have already resigned themselves to the fact that they'll never be able to retire. Or at least that they'll be working into their 70s. And these are mostly two income families. It just blows my mind. I want to yell at them "the ability to retire someday is 100% within your control. Just stop buying shit you don't need and start saving!". I always feel like I'll be taken as being holier-than-thou when I tell them I should be able to retire by 60 at the latest, probably in my mid-50s. I make pretty good money, but a two income family where both people make average money makes more than me. And I know some of these people do far better than average.
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We always had an extra car (2002 Jeep Grand Cherokee that I bought for $2500 bucks with 100,000 miles on it) available that the kids could use to go to work with and the occasional night out, but it was always our car. They had to ask permission. We had an agreement that if they used the car, they had to spend time with me on the weekend going over maintenance and cleaning of the car. Maybe an hour at the most.
I liked our system because it gave them access to wheels so they could earn money to buy their own cars, I was able to make sure it was safely operational and insured (for my peace of mind) and they learned how to take care of a car (or at least be mindful of its needs).
I kept the car after they all grew up and moved out. It's come in handy for when they may need to have a vehicle to borrow for a while
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I've driven the same Toyota Corolla since Nov, 2007. I only want one car payment and the wife's is up in a year. She'll drive her car for 11 or 12 years. I will finally get a truck. I want to climb in and out. Never owned one but for me, I want something with more leg room and more height plus the bonus of hauling stuff to the dump ect....
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I've driven the same Toyota Corolla since Nov, 2007. I only want one car payment and the wife's is up in a year. She'll drive her car for 11 or 12 years. I will finally get a truck. I want to climb in and out. Never owned one but for me, I want something with more leg room and more height plus the bonus of hauling stuff to the dump ect....
I've taken to this strategy: I drive a 2006 BMW X3 with 125k on it. Fun car, does what i need it to do, reliable as all get out and I can do most of the repairs myself (or with my stepson's help; he is/was a BMW tech). I also have a '99 Dodge Ram (before that, a '98 Toyota Tacoma) that I use for the dump stuff, and if the kids need a set of wheels. Same amount out of pocket (roughly), no car payments, and maximum convenience.
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The problem with car debt (and I had some myself before finishing paying off my Civic) is that unlike a mortgage, your value goes down a lot once you take it off the dealer. So besides your interest, the car drops in value, so you are really paying a lot at the end of the day for a new car loan. However, I am not a car guy. I don't want someone else's problem and I'd rather pay off a car over 5 years that allows me to get to work so I can make those payments and more.
That same civic, I bought for 15.5, but after all said and done, paid close to 19k with interest back in 2010. I am still driving it and getting close to 150k miles and just made a lot of money from my stock options that I can now pay for a car in cash if I wanted to. Yet I haven't and don't plan on it. So even with stating what I said above, I think this was a good money decision at the end of the day since it allowed me to get to work to pay it off (one year early) and then I have a low cost vehicle for the life of it while being able to just hold onto and save that cash I recently received.
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Certainly car loans aren't terrible if you're willing to pay them off and then drive the car for several more years until it becomes unreliable. They're generally pretty low interest, so they're not the worst type of loan available. That being said, I'd greatly prefer to never have a car loan again.