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>I don't understand why this author is so vehemently against this kind of debt? Easy: financial ignorance. Debt is just one way to finance an asset purchase.
by prolly_a_moron 10y ago
>I don't understand why this author is so vehemently against this kind of debt?
Easy: financial ignorance.
Debt is just one way to finance an asset purchase. As long as the asset returns are greater than it costs to service the debt, it makes no difference whether the asset is paid out of current income or not.
The corollary is that stupid purchases are stupid, whether you pay cash or go into debt for them.
- k__ 10y agoSure thing, but how to know what is stupid or not? The parents of my girlfriend live in a small flat in the center of a big city for 25 years now. Since the rent increase is capped by law, they're paying the same amount of money as their daughter for a 18m² room in a shared flat. On the other hand, the parents of a friend built a house on a credit, but after 10 years their bank was allowed to increase the interest rate so in the end they had to sell the house, because they couldn't afford to pay off the credit anymore.