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Daily Poll 47: How do you feel about debt?
Other people’s money is the only way to get rich and the only way to live. American consumer culture tells you that you can’t drive a car without a payment, own a home without a mortgage or be a student without a loan. I got inspired by Dave Ramsey last year to get myself out of debt and I’ve gotten through the first half of my debt snowball, with some help from my family, and I intend to pay off my loans in May. I’m freedom minded and that doesn’t mean freedom from government it also means financial freedom and you can’t be free when all your money is being sent to your creditor’s wallets. Those are just my thoughts on debt. I’m interested in yours.
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Daily Poll Archive: https://docs.google.com/document/d/1RMWvFs61zoj_pjeH8Rmmbrnfw6JVVRpg5yXt9V1hnos/
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3 Replies
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I went a long time avoiding debt as much as possible, but I’ve more recently embraced it as a tool for elevating my position in life. I think debt and loans are a useful tool, but also can become a major burden if you let it get out of hand.
What Ive concluded is debt is the best defense against inflation without switching currency. Your balance doesn’t reflect the value of the dollar, only the cost when the contract was signed. When the interest rates are half the inflation rate, you’re going to do okay.
I’ll use my truck as an example. When I bought my truck, I found it used for 16k. I dickered them down to 14k. Since that sale, the same trucks with similar mileage and options are listed as high as 35k. (At least here in Washington.) The combination of increased demand in the used car market due to supply shortages, and the devaluation of the dollar means I came out way ahead. If I’d saved up until I had the balance in full, I’d have watched the prices climb faster than my savings.
That being said, when prices are inflated, it’s a bad time to lock yourself into a debt contract. As soon as the prices come back down, you owe more than the value of whatever you’re paying on. Since the interest rate is artificially limited to 6% when it should be more like 15%, debt is a good way to defend against the inevitable price increases on products that aren’t currently in short supply relative to demand. Right now is a horrible time to buy a pickup truck, but may be a great time to get a loan on undeveloped land.
It’s like any other tool. You can hurt yourself if you use it wrong, but used right, it can offer great results.
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That being said, most debt is backed by the federal reserve somewhere down the line, so choosing a creditor is something you shouldn’t take lightly. I learned this after I got into my truck loan, unfortunately.
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I’ll never miss a chance to say Fuck the Fed.
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