that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
I have learned from poker that being at the table is not a grind, the grind is living and poker is how I pass the time
Like Highcard said, there's good debt and bad debt, or +ev debt and -ev debt if you like
Student loans nowadays are probably -ev debt in the long run with the crappy job market. We're lucky in NZ that we have 0% interest on our student loans wee
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
Mig hefur alltaf langað til að vitna í sjálfan mig - Ég sjálfur
Probably would be more accurate to display yearly incomes too nonetheless loans are massively ev- except a few ones. I avoid them like the plague, never had one except on a house that I sold.
Hard to beat inflation with loan rates going between 4.5 and 17%
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
Odds are exactly 50%: it either happens or not
1
blackjacki2 United States. Jun 24 2012 20:58. Posts 2581
On June 24 2012 12:41 Spitfiree wrote:
its +EV for you if you take a loan and Inflations raises as you return money with less real value than the amount you took
or if you can use the money elsewhere and get a higher return than what the interest on the loan is
On June 24 2012 15:39 Achoo wrote:
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
yes true, real assets are the answer
but for clarity, what exactly do u mean by injecting lots of cash into ur credit? r u meaning upgrading ur home/real estate/asset or meaning something else? if something else, example plz?
On June 24 2012 12:41 Spitfiree wrote:
its +EV for you if you take a loan and Inflations raises as you return money with less real value than the amount you took
u seem to forget or not realize the overall effects of inflation coupled by wages for the working guy who took the loan usually being the last thing to go up
On June 24 2012 04:11 Achoo wrote:
Probably would be more accurate to display yearly incomes too
would u explain why u think this cuz I tend to disagree
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
au contraire, either way the lender does gain. Especially if we agree that more times than not the proprietary "lender" in the world is the banks
On June 24 2012 01:35 K40Cheddar wrote:
Interesting comic but not entirely accurate
ur right, it is in black & white
On June 23 2012 23:58 Highcard wrote:
that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
future outlooks are speculative - they are not facts. imo the bum or whomever is out of debt has more future earning potential as he has no debt to pay off first. When I define future earning potential, I do not look through the lens of going in debt tagged with interest in order to be profitable. As long as the bum or whomever is out of debt did not go through bankruptcy to do so they have better earning potential
speaking generally of course..
The probability of someone watching you is proportional to the stupidity of your action.
On June 23 2012 23:58 Highcard wrote:
that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
future outlooks are speculative - they are not facts. imo the bum or whomever is out of debt has more future earning potential as he has no debt to pay off first. When I define future earning potential, I do not look through the lens of going in debt tagged with interest in order to be profitable. As long as the bum or whomever is out of debt did not go through bankruptcy to do so they have better earning potential
speaking generally of course..
What does amount of debt have anything to do with earning potential? No doubt the bum's networth is going to be higher than the recent graduate for a few years but in terms of earning potential, you would expect the graduate to be able to get a job earning more than the bum could and to also have their wage go up. Don't think that's gonna happen for the bum. Doesnt matter if you don't like the way the graduate is going about it, chances are that their earning potential is going to be quite a bit higher esp as time goes on.
In a few years time the both the earnings and the net worth of the graduate should be higher than the bum's.
By being a beggar, the bum is generally guaranteed to not be able to build any networth because he is too busy trying to survive day to day. Whereas generally speaking, someone working at a decent job should be able to get out of debt and then start building their networth, especially if they are frugal and manage their career well. I do get that the economic conditions are pretty shit atm tho for trying to get jobs.
Personally I'm happy that I got a student loan and that I have a decent paying job now reducing my loan and building up assets compared to being a bum on the street with a networth of $10 for life.
In New Zealand, the government actually gives money to jobless people and there are actually quite a few who don't work and just stay at home all day. The amount for someone at 26 is 1120 NZD per month gross and this would be all that person could ever make if they chose to just take the benefit money. I imagine that they would have little debt and assets.
Contrast with my case where I got 40k in student loan debt and started at 3750 NZD a month gross. I'm now up to 6250 per month gross after 5 years and I think I still have potential to go higher. My student loan is now down to about 20 something thousand as well and I have been saving up. Heck, I think my networth might have actually reached 0 wee
Again, I much prefer my situation, esp in my country I guess.
On June 24 2012 15:39 Achoo wrote:
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
yes true, real assets are the answer
but for clarity, what exactly do u mean by injecting lots of cash into ur credit? r u meaning upgrading ur home/real estate/asset or meaning something else? if something else, example plz?
Putting efforts, that is renovations you can do yourself or at a cheap price, add value to your real estate: It is not worth mentionning since it's obvious but some quick embelishments can make your property a lot more valuable (sometimes removing a wall or making your home trendy will bring a positive return). You should consider what are the expectations of a potential buyer (distance from closest city or industrial sites, accessibility, etc ...). Things to consider mainly is how your neighbourhood is going to develop in the future (infrastructures like highways, trains, industrial projects, etc), the more people to come, the more value added to the real estate in your location. "Injecting a lot of cash" means making down payments yearly on your loan b/c the first years you pay mainly interests, thus by doing so you'll greatly reduce the net loss on the long run, ask your banker you can usually pay up to 10% without penalties and make 1 or two "double" monthly payments on top. It's very important to do so at the beginning.
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
au contraire, either way the lender does gain. Especially if we agree that more times than not the proprietary "lender" in the world is the banks
nonon - I'm just talking about the zero-interest loans, that keep up with inflation... The interest rate being subsidized by the government makes it so that the lender doesn't gain.
As has been mentioned - you could take these free-interest student loans and invest them in higher yielding products and make a solid profit.
Mig hefur alltaf langað til að vitna í sjálfan mig - Ég sjálfur
On June 24 2012 00:57 R_I wrote:
Like Highcard said, there's good debt and bad debt, or +ev debt and -ev debt if you like
Student loans nowadays are probably -ev debt in the long run with the crappy job market. We're lucky in NZ that we have 0% interest on our student loans wee
this is not true, debt in itself is bad. There is only good or bad expectations
big diff
The probability of someone watching you is proportional to the stupidity of your action.
Korea (South). Jun 24 2012 00:53. Posts 6817
nonetheless loans are massively ev- except a few ones. I avoid them like the plague, never had one except on a house that I sold.
