patrick.net

Patrick says

I know the math sometimes works for having debt, but I have a visceral aversion to paying any interest, ever.

That's kind of where I'm at. The extra $$ I'm paying towards the mortgage could I invest it.. of course.

Conversley, could I leverage debt to my advantage? Of course. But leverage works both ways.

I've run the math and the difference between paying the minimum on my loans and investing it today, vs paying down the debt now and then investing significantly more money later once the house is paid off. In some scenarios I win, others I loose, some are a push. It depends on what the broader economy does over the next 5 to 10 years. 2022 was meh. 2023 is looking to be about the same. I'd tue "everything bubble" ever pops, or even continues to deflate, then at some point it will make sense to jump in and ride the next wWA.

And as I say. I'm making out retirement accounts already. This is what do do with my "free" cash flow. Invest it or pay down the mortgage. It's a true first world problem and I'm blessed to be in such a strong position financially.

Reading the comments, some love debt as a tool to create wealth (the old adage it takes money to make money) other stay away from it (neither a borrower or a lender be)

There is also a difference between "good debt" and "bad debt" but that's a whol different debate.

GreaterNYCDude says

There is also a difference between "good debt" and "bad debt" but that's a whol different debate.

It's not a debate though. Think of it this way. You have a drill. You either know how to use it or not. There are are flat head, phillips, square, regular drill bits, etc. Some people just don't know how to use the damn thing. Is that the drills problem?

People can't blame debt if they don't know how to use it. As I said, 80% of us are dead without debt. Back to the early 1800's. I'll take the debt 10 out of 10 times. Unless you fraudulently obtained said debt you don't have to pay it either and won't go to jail.

The problem is lack of training. Most in this country are financially illiterate. Schools don't even teach the basics anymore (balancing a checkbook, interst vs. principal, making a budget, etc)

GreaterNYCDude says

The problem is lack of training. Most in this country are financially illiterate. Schools don't even teach the basics anymore (balancing a checkbook, interst vs. principal, making a budget, etc)

It's so easy to obtain this information ignorance is not an excuse. It's not exactly rocket science either.

Eric Holder says

It's so easy to obtain this information ignorance is not an excuse. It's not exactly rocket science either.

The lingo is intentionally hard to understand because the system relies on deception, greed, and thievery. So agreed, bullshit != rocket science.

Eric Holder says

It's so easy to obtain this information ignorance is not an excuse. It's not exactly rocket science either.

I've told the story before. We bought our house $85k cash. We didn't have it. Not even close at the time. You figure it out. Margin loan from the MIL on her stock and we bought it cash. Refi'd and paid her back and paid $180/mo interest only for 12 months to own the home...

None of it is rocket science. You just were never taught about it in high schools which is probably 50% at best of educated people. 25% got a college degree of substance or finished. Education does not equal intelligence. The more educated, I've found them to be dumber overall. My uncle can't read and probably has $100M in his bank account/investments. Has more land than extremely famous people as neighbors in Desert Mountain in Scottsdale.

Debt and leverage is how you get out of a shit hole life. 100%. You might fuck up. Guess what. You don't have to pay it. That's the beauty of debt. It's tax free too. Get equity in a couple buildings and pay yourself $200k tax free in a cash out refi. It is basic math. Driving a car is probably riskier than debt.

GreaterNYCDude says

Most in this country are financially illiterate.

I have found that financial illiteracy is not the problem. The issue is the borrower does not care as long as he can get it now. Anyone can multiply the monthly payment amount on a car by the number of payments and see the total cost. The only concern the joker has with a 72 month loan is whether he can be approved for the monthly payment.

ECBB said: With high yield savings paying about 4% right now, that's a 1% spread relative to my 3% mortgage.
And that 4% interest income on savings will be taxed at 24% (federal income tax rate) if you and your wife make more than $90k, so it's essentially a wash right now. I say more cash on hand or dollar cost average into an index fund (which will produce some qualified dividends, but most gains will be LTC).

I borrowed 500K at 2.1 pct interest in September 2021 to buy a farm. Due to Bidenflation I am paying it back as slow as possible.

NuttBoxer says

Eric Holder says

It's so easy to obtain this information ignorance is not an excuse. It's not exactly rocket science either.

The lingo is intentionally hard to understand because the system relies on deception, greed, and thievery. So agreed, bullshit != rocket science.

Do you really-really find the lingo unsurmountable?

Rates are high , what assets to buy now. Nothing is coming down. Hosing is coming down few % but barely.

CD n bonds are only choice

Bd6r says

I borrowed 500K at 2.1 pct interest in September 2021 to buy a farm. Due to Bidenflation I am paying it back as slow as possible.

@Bd6r Damn, if you could borrow at 2.1% and buy US Treasuries at 4.5%, you'd have a perpetual money machine.

richwicks says

WookieMan says

A new building dude. Pay tradesmen that then buy groceries and goods and keep other people employed that then buy more goods. They then build a house or buy a house and the cycle continues.

All you're doing is driving up the cost for everybody else.

Look, I understand the system, I accept it for what it is, but it's going to destroy the country in time. It used to be that land and stock speculation was literally illegal. That was 200 years ago, but can't you see what kind of development that has occured in our civilization just because we got rid of the worst parasites for just 200 years?

You personally have more access to information and travel than the richest man in the world did in 1800. You might live in a smaller home, but you don't have to have servants to feed and groom the horses, to maintain your buggy, to keep stoking the fire in...

@richwicks @wookieman

A lot of good points are made in this comment. Richwicks is correct in that the system is flawed. Either you use debt to control others or you are controlled by debt. I believe this is the system as it is designed. Default is baked into the cake. How many times has the US defaulted? But then the parasite class continues to get bailouts. This time around (covid) everyone got bailed out. This is total fraud.

Eric Holder says

Do you really-really find the lingo unsurmountable?

If you get deep into "investment" advise, it can sound confusing pretty quickly. But if you remember it's all about making money by doing nothing, leveraging out the ass, and taking advantage of others, the truth tends to cut through the jargon.

Patrick says

Bd6r says

I borrowed 500K at 2.1 pct interest in September 2021 to buy a farm. Due to Bidenflation I am paying it back as slow as possible.

Bd6r Damn, if you could borrow at 2.1% and buy US Treasuries at 4.5%, you'd have a perpetual money machine.

You'll need a time machine to do that.

NuttBoxer says

Eric Holder says

Do you really-really find the lingo unsurmountable?

If you get deep into "investment" advise, it can sound confusing pretty quickly.

So? If you get into any new to you area it might sound very confusing quickly. But is it really harder to understand than Physics or Calculus? No, it's much simpler.

GNL says

A lot of good points are made in this comment. Richwicks is correct in that the system is flawed. Either you use debt to control others or you are controlled by debt. I believe this is the system as it is designed. Default is baked into the cake. How many times has the US defaulted? But then the parasite class continues to get bailouts. This time around (covid) everyone got bailed out. This is total fraud.

You make a valid point, but everything is flawed. If it wasn't you should just be able to buy one car when you're 16 and drive it until you're 95. Possible, but not feasible.

Debt ain't perfect for sure. But nothing is. If I have gold or silver, they're still gonna give me paper money. Guess what, shit hits the fan your physical gold/silver is gone. There's no perfect system. My buddy basically built the most recent JP Morgan investing site as the lead. One of the worlds leading investment banks had to rebuild something that wasn't working.

The way I look at debt is like a product. It's bread, milk, cheese, etc. If you have lactose issues don't eat/drink the milk or cheese. Stick to bread. Debt is milk/cheese for some people. And that's okay. If I call someone a bad person or pussy because they can't eat cheese, that's pure intellectual laziness. I'd say dude, that sucks I love cheese. I can handle cheese (DEBT) and I'm sorry you can't. I'm sure you like other foods though?

That's my line of thought. Some people simply cannot handle debt. That's fine. To say it's bad is absolutely wrong. We've emailed privately GNL You literally don't have a job without other people using debt. I wouldn't have either for 15 years. Rich doesn't have a job (Edit, I believe he does, that came across bad). Hence why I say we'd all be dead. It's all a ponzi scheme, but as long as incomes grow to some extent it's fine. So you get a Chevy instead of a Mercedes. You buy generic at the grocery store. The alternative without debt is literally death. Every working person on this forum is paid with debt....

If/when we go to CBDC as "currency", I believe that is when it becomes apparent that debt is slavery. They'll need to be able to control your $$ just to keep the system fluid.

The biggest problem imo is that the wrong people/group have/has control over the creation of money. They also fraudulently bailout certain groups. You can't have an honest system without failure...for everyone. Failure can't simply mean that an entity/person can fail without financial pain. The only people that get bailed out are failures. That's insane.

ECBB,

Debt is a tool….just like a knife. It cuts both ways. With that said, do what makes you feel comfortable. A piece of mind is worth a lot.

What I’ve learned is that liquidity = value during time of crisis like a recession or a job loss. We don’t have access to the liquidity when we’re paying down our mortgage…especially at 3% interest rate.

How about an alternative? Instead of paying $2k/mo towards mortgage principal, put that money in short term CD’s. Quite a few banks offer north of 4% now. Here’s a sheet I recently got from Fidelity.

Once you have amassed enough cash from these CD’s, you can payoff the house at once if you’re desired to. In the meantime, hang onto the liquidity and use CD’s as a way to offset the interest you’re paying on your mortgage?

To emphasize that debt is a tool, here’s a short read from someone who shared his personal experience going from being a normal Joe to having a net worth of $10M, etc…

“When I finally achieved a net worth of $250,000, I realized that within a few years I could be a millionaire.

By the time I had a net worth of $500,000, I realized that I was absolutely going to be a multimillionaire.

A few years later, when I became a millionaire, I realized that three million would be fairly easy to achieve.

When I reached three million a few years later, I realized that I could be at five and ten million in no time at all.

The time from five million to ten million was much shorter than the time that it took me to achieve my first $250,000.

I had a steady income, just an average paying salary. I was living below my means and that allowed me to invest in, and eventually buy, the company that I was hired 20 years earlier to start. Then I was able to pay myself a little more and receive benefits of business ownership on a larger scale.

Any additional income came from various real estate investments.

Today, nearly forty years later, 95% of my net worth can be attributed to real estate.”

Of course you can make money in real estate.

The problem is you may have an illiquid net worth; my friends in Santa Cruz own expensive houses but can't raise $1000 in a hurry.

My mutual funds are liquid; I can move a mouse and put a lot of dough in my checking account anytime.

But it's not too bad collecting rent either if you own more than one place.

https://nakedemperor.substack.com/p/this-weeks-must-reads-18-24-march

Patrick says

https://nakedemperor.substack.com/p/this-weeks-must-reads-18-24-march

overdue for a recession but not going to happen (as far as being reported in the economic data) during a re election year with a Democrat in the White House

they let the air out or burst right after the November election just like gas prices conveniently or "miraculously" increased after the 2022 midterms because of how they manipulated and misused the strategic oil reserve

AD says

Patrick says

https://nakedemperor.substack.com/p/this-weeks-must-reads-18-24-march

overdue for a recession but not going to happen (as far as being reported in the economic data) during a re election year with a Democrat in the White House

they let the air out and burst right after the November election just like gas prices conveniently or "miraculously" increased after the 2022 midterms because of how they manipulated and misused the strategic oil reserve

Agreed

AD says

gas prices conveniently or "miraculously" increased after the 2022 midterms because of how they manipulated and misused the strategic oil reserve

Gas prices are creeping up now. It can't be good for the incumbent. Why aren't they "manipulating" them down?

Price suppression only goes so far. The natural force of the free market cannot be contained forever. Hyperinflation is the only logical outcome of central banking..

30 billion deficit month after month means they will have to get it back with inflation, interest, taxes and the climate fraud. Those 5% bank rates only extend out 5 years that will be here soon after that who knows.

Eric Holder says

AD says

gas prices conveniently or "miraculously" increased after the 2022 midterms because of how they manipulated and misused the strategic oil reserve

Gas prices are creeping up now. It can't be good for the incumbent. Why aren't they "manipulating" them down?

Because they already drawn a lot of oil from the strategic reserves for about 7 months before the 2022 midterm election.

.

They'll just let the Trump tax cuts expire in 2025. There is not enough consensus in Congress now (and likely in 2025 to 2027) to at least partially renew them.

So that extra tax receipts or revenue will go to reduce the deficits (increase "net income" or cash flow) if the federal government can restrain spending increases.

.

AD says

So that extra tax receipts or revenue will go to reduce the deficits (increase "net income" or cash flow) if the federal government can restrain spending increases.

There will be no 'extra' tax receipts or revenue. In fact, it will go down.

The tax cuts were not for 'the rich' as the media falsely claims but for the middle class at the expense of said rich. Example, the rich's precious SALT deduction will be restored. The Treasury will lose hundreds of billions in revenue when that happens.

Then there are the Laffer Curve effects blown away from the reversion of the business tax code back to what it was.

DemocratsAreTotallyFucked says

The tax cuts were not for 'the rich' as the media falsely claims but for the middle class at the expense of said rich. Example, the rich's precious SALT deduction will be restored. The Treasury will lose hundreds of billions in revenue when that happens.

Then there are the Laffer Curve effects blown away from the reversion of the business tax code back to what it was.

Absolutely true.

Patrick says

Damn, if you could borrow at 2.1% and buy US Treasuries at 4.5%, you'd have a perpetual money machine.

Ding, ding, ding... our fearless leader points out the yen carry trade before it went south. Feels like old times. Wonder what other secrets are hiding in our financial systems...

Oh looky!

Democrats are suddenly concerned about the national debt!

"One quarter of the war budget would have fixed Social Security for the next seventy-five years."

https://www.rollingstone.com/politics/politics-news/the-2-trillion-war-44421/

DemocratsAreTotallyFucked says

Oh looky!

Democrats are suddenly concerned about the national debt!

... but "conservatives" suddenly don't mind neither $5K child credit nor $20 Federal min wage. And I suspect if their guy came up with the idea of POTUS not allowing potatos to get more expensive they would love it too. (They hate, HATE it now).

🤡 world.