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> Young men starting in life should avoid running into debt. There is scarcely anything that drags a person down like debt. It is a slavish position to get in..

> Young men starting in life should avoid running into debt. There is scarcely anything that drags a person down like debt. It is a slavish position to get in... Well, that put student debt in perspective no ?

SketchySeaBeast 8y ago
Also mortgages.
- i_am_proteus 8y ago
  Secured debt and unsecured debt are different animals entirely.
  - deleted 8y ago
    [deleted]
- bencoder 8y ago
  the very next paragraph: > Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. <snip> > This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided.
- derekp7 8y ago
  Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course). Whereas debt for a depreciating asset (like a car, or most things that go on a credit card) are what I would consider "real" debt. In other words, keep your net debt low or non existent (when looking at a balance sheet).
  - burlesona 8y ago
    If you owned a house in 2008, I assure you, you'd feel that your mortgage was real debt. Or if you ever got laid off. Or if you ever got injured or severely sick and found yourself with shocking hospital bills. When life hits you with something like that, suddenly that monthly payment, and the risk of foreclosure, bankruptcy, and severely damaged credit, all looms large over your head like the Sword of Damocles. Yes a mortgage is real debt.
    - pm90 8y ago
      Sure, but most people who do take on mortgages do just fine. There will be exceptions but on the average, taking on mortgage to purchase a home in the US is generally a safe bet.
    - nightski 8y ago
      The majority of what you said is true of renting also.
  - moorhosj 8y ago
    ==Because even though you owe, you also own as much as you owe (except during a market downturn of course).== Do you own that much? Let's put some real numbers on this. You buy a $350k house, and put down $70k (20%). That leaves you with a $280k mortgage at 4%. This gives you a monthly mortgage payment of $1,337. If you pay that monthly, you would own 51% of the house ($175k of equity) some time in the 16th year of your mortgage. After making 188 mortgage payments. Note, this doesn't include housing value appreciation. COST 20% down - $70k mortgage payments ($1,337 * 188) - $251,356
    - deleted 8y ago
      [deleted]
    - sk5t 8y ago
      I suspect the parent is talking about leverage; and, your view of cumulative mortgage payments ignored the time value of money.
  - astura 8y ago
    Yes, they certainly are a debt, but they are, in general, considered a "good debt." Educational debt and business startup debt are also, in general, considered "good debt." https://www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp https://www.investopedia.com/articles/pf/12/good-debt-bad-de... That being said, it's a general statement, specific cases of those can be "bad debts" if they are taken out recklessly and/or without forethought and planning and budgeting.
  - pmoriarty 8y ago
    "Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course)." You also pay interest, which could be a huge amount (depending on how quickly, if ever, you pay off your principal).
    - derekp7 8y ago
      The interest though isn't debt -- as soon as you sell the property, you only owe at that time the remaining balance, not the total amount of interest you would pay. In other words, interest is what you pay to rent the money used to buy the house.
  - ska 8y ago
    Of course it's debt. But it is secured debt, which is a bit of different risk profile. Never forget though, you are paying quite a bit for the use of that money (i.e. the banks). This is mitigated in a rising market, but lots of houses (well land, really) don't appreciate fast enough to counter this. Not to mention the additional costs. It might be more accurate to think of your house as a depreciating asset (the house) bundled with a (hopefully) appreciated asset (the land it is on)
  - wonderwonder 8y ago
    Sure, you pay interest on the loan. By the time the loan is paid off you have generally paid well in excess of the original loan amount back to the lender. Borrow 100k at 4% for 30 years and at the end you have paid $171,870. Maybe the home appreciates at the same rate, maybe not. You are right in that it is better than credit card debt my a mile though.
loudmax 8y ago
Barnum himself spent much of his life in and out of debt. He was a great showman and many of the performances he arranged were extreme financial successes, but he was a profligate spender and he was always one disaster away from going deep into dept.
- nathanvanfleet 8y ago
  Is this a good reason to go into debt?
  - stronglikedan 8y ago
    Strange inference of yours, but regardless, the answer is "no", and I'm sure Barnum could provide the anecdata were he still able to communicate.
- gridlockd 8y ago
  "Do as I say, not as I do!"
  - dta5003 8y ago
    More charitably, perhaps he is relaying advice he learned the hard way.
- zeckalpha 8y ago
  Sounds familiar to my modern ears. I wonder who Barnum would be today?
abfan1127 8y ago
Dave Ramsey says the same things.
- giancarlostoro 8y ago
  There is nothing new under the sun.
slg 8y ago
It is weird to see this mindset on a site that is basically founded on the idea that taking on debt can be valuable. What would the startup scene be like if everyone avoided debt at all costs?
- andrewtbham 8y ago
  Even though many startups use convertible notes... it's not real debt that will haunt you for years to come and compound. It's selling equity.
- ramblerman 8y ago
  A company taking on debt and yourself as a person are wildly different things.
- golergka 8y ago
  Debt and investment are two very different things.
- lumost 8y ago
  Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy, if it doesn't work the business will probably fold. While this makes sense for capex intensive businesses. It's an irrational choice for a tech startup that may need to pivot, partner or be acquired. For those choices you need a source of capital with similar incentives as the founders.
  - xiaosun 8y ago
    If the equity sold has preferred returns or liquidity preferences, then the impact of the compounding cost to common shareholders is not too dissimilar from the impact of debt.
  - cat199 8y ago
    > Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy wha? selling debt you are committing yourself to a financial obligation, selling equity you are committing yourself to a strategy in the hope that that strategy will be successful.. yes, it is not binding fiscally and so the strategy can be renegotiated without penalty, but that doesn't by proxy imply the converse that debt inherently requires a fixed strategy.. this is why you can get cash flow/line of credit loans based simply on historical accounting data, etc.. that said getting loans under false pretenses is also fraud. YMMV
epr 8y ago
> I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit. Did you really just not read the article at all? He is clearly referring to things like consumer debt rather than investments.
- dang 8y ago
  Could you please follow the site guidelines when posting here? Your comment would be fine with just the last sentence. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
jobu 8y ago
He clarified this point it a bit in the second paragraph: "Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. “If a young man,” he says, “will only get in debt for some land and then get married, these two things will keep him straight, or nothing will.” This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided" In some ways, student debt is similar to land in that it can provide a return on investment that allows for paying off the debt over time. The main difference being that land is tangible and can be sold to pay off the debt completely. Borrowing for food, clothing, and other items that tend to be used up or worn out before they're paid off does seem like a terrible idea.
- DougWebb 8y ago
  Buying the wrong land, or overpaying for it, will still get you into trouble. You might be able to sell it, but not for as much as you paid for it. Student debt has the same problem: get the wrong degree, or overpay for the degree you've gotten, and you'll lose in the long run.
- pseudoanonymity 8y ago
  Many full-time students use their loan funds to pay for food and clothing, in addition to tuition and housing.
  - monocasa 8y ago
    You can lose access to grants if you work enough to support yourself.
  - astura 8y ago
    So? In my case the choice was use student loan money to pay for living expenses (which were extremely meager) while in college or not go to college at all. It was part of my educational investment. It was totally worth it, the loans are long paid off, and the investment has paid untold dividends in the form of a salary I wouldn't have the chance at if I didn't go to school.

SketchySeaBeast 8y ago

Also mortgages.

i_am_proteus 8y ago
Secured debt and unsecured debt are different animals entirely.
- deleted 8y ago
  [deleted]
bencoder 8y ago
the very next paragraph: > Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. <snip> > This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided.
derekp7 8y ago
Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course). Whereas debt for a depreciating asset (like a car, or most things that go on a credit card) are what I would consider "real" debt. In other words, keep your net debt low or non existent (when looking at a balance sheet).
- burlesona 8y ago
  If you owned a house in 2008, I assure you, you'd feel that your mortgage was real debt. Or if you ever got laid off. Or if you ever got injured or severely sick and found yourself with shocking hospital bills. When life hits you with something like that, suddenly that monthly payment, and the risk of foreclosure, bankruptcy, and severely damaged credit, all looms large over your head like the Sword of Damocles. Yes a mortgage is real debt.
  - pm90 8y ago
    Sure, but most people who do take on mortgages do just fine. There will be exceptions but on the average, taking on mortgage to purchase a home in the US is generally a safe bet.
  - nightski 8y ago
    The majority of what you said is true of renting also.
- moorhosj 8y ago
  ==Because even though you owe, you also own as much as you owe (except during a market downturn of course).== Do you own that much? Let's put some real numbers on this. You buy a $350k house, and put down $70k (20%). That leaves you with a $280k mortgage at 4%. This gives you a monthly mortgage payment of $1,337. If you pay that monthly, you would own 51% of the house ($175k of equity) some time in the 16th year of your mortgage. After making 188 mortgage payments. Note, this doesn't include housing value appreciation. COST 20% down - $70k mortgage payments ($1,337 * 188) - $251,356
  - deleted 8y ago
    [deleted]
  - sk5t 8y ago
    I suspect the parent is talking about leverage; and, your view of cumulative mortgage payments ignored the time value of money.
- astura 8y ago
  Yes, they certainly are a debt, but they are, in general, considered a "good debt." Educational debt and business startup debt are also, in general, considered "good debt." https://www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp https://www.investopedia.com/articles/pf/12/good-debt-bad-de... That being said, it's a general statement, specific cases of those can be "bad debts" if they are taken out recklessly and/or without forethought and planning and budgeting.
- pmoriarty 8y ago
  "Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course)." You also pay interest, which could be a huge amount (depending on how quickly, if ever, you pay off your principal).
  - derekp7 8y ago
    The interest though isn't debt -- as soon as you sell the property, you only owe at that time the remaining balance, not the total amount of interest you would pay. In other words, interest is what you pay to rent the money used to buy the house.
- ska 8y ago
  Of course it's debt. But it is secured debt, which is a bit of different risk profile. Never forget though, you are paying quite a bit for the use of that money (i.e. the banks). This is mitigated in a rising market, but lots of houses (well land, really) don't appreciate fast enough to counter this. Not to mention the additional costs. It might be more accurate to think of your house as a depreciating asset (the house) bundled with a (hopefully) appreciated asset (the land it is on)
- wonderwonder 8y ago
  Sure, you pay interest on the loan. By the time the loan is paid off you have generally paid well in excess of the original loan amount back to the lender. Borrow 100k at 4% for 30 years and at the end you have paid $171,870. Maybe the home appreciates at the same rate, maybe not. You are right in that it is better than credit card debt my a mile though.

loudmax 8y ago

Barnum himself spent much of his life in and out of debt. He was a great showman and many of the performances he arranged were extreme financial successes, but he was a profligate spender and he was always one disaster away from going deep into dept.

nathanvanfleet 8y ago
Is this a good reason to go into debt?
- stronglikedan 8y ago
  Strange inference of yours, but regardless, the answer is "no", and I'm sure Barnum could provide the anecdata were he still able to communicate.
gridlockd 8y ago
"Do as I say, not as I do!"
- dta5003 8y ago
  More charitably, perhaps he is relaying advice he learned the hard way.
zeckalpha 8y ago
Sounds familiar to my modern ears. I wonder who Barnum would be today?

abfan1127 8y ago

Dave Ramsey says the same things.

giancarlostoro 8y ago
There is nothing new under the sun.

slg 8y ago

It is weird to see this mindset on a site that is basically founded on the idea that taking on debt can be valuable. What would the startup scene be like if everyone avoided debt at all costs?

andrewtbham 8y ago
Even though many startups use convertible notes... it's not real debt that will haunt you for years to come and compound. It's selling equity.
ramblerman 8y ago
A company taking on debt and yourself as a person are wildly different things.
golergka 8y ago
Debt and investment are two very different things.
lumost 8y ago
Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy, if it doesn't work the business will probably fold. While this makes sense for capex intensive businesses. It's an irrational choice for a tech startup that may need to pivot, partner or be acquired. For those choices you need a source of capital with similar incentives as the founders.
- xiaosun 8y ago
  If the equity sold has preferred returns or liquidity preferences, then the impact of the compounding cost to common shareholders is not too dissimilar from the impact of debt.
- cat199 8y ago
  > Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy wha? selling debt you are committing yourself to a financial obligation, selling equity you are committing yourself to a strategy in the hope that that strategy will be successful.. yes, it is not binding fiscally and so the strategy can be renegotiated without penalty, but that doesn't by proxy imply the converse that debt inherently requires a fixed strategy.. this is why you can get cash flow/line of credit loans based simply on historical accounting data, etc.. that said getting loans under false pretenses is also fraud. YMMV

epr 8y ago

> I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit. Did you really just not read the article at all? He is clearly referring to things like consumer debt rather than investments.

dang 8y ago
Could you please follow the site guidelines when posting here? Your comment would be fine with just the last sentence. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

jobu 8y ago

He clarified this point it a bit in the second paragraph: "Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. “If a young man,” he says, “will only get in debt for some land and then get married, these two things will keep him straight, or nothing will.” This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided" In some ways, student debt is similar to land in that it can provide a return on investment that allows for paying off the debt over time. The main difference being that land is tangible and can be sold to pay off the debt completely. Borrowing for food, clothing, and other items that tend to be used up or worn out before they're paid off does seem like a terrible idea.

DougWebb 8y ago
Buying the wrong land, or overpaying for it, will still get you into trouble. You might be able to sell it, but not for as much as you paid for it. Student debt has the same problem: get the wrong degree, or overpay for the degree you've gotten, and you'll lose in the long run.
pseudoanonymity 8y ago
Many full-time students use their loan funds to pay for food and clothing, in addition to tuition and housing.
- monocasa 8y ago
  You can lose access to grants if you work enough to support yourself.
- astura 8y ago
  So? In my case the choice was use student loan money to pay for living expenses (which were extremely meager) while in college or not go to college at all. It was part of my educational investment. It was totally worth it, the loans are long paid off, and the investment has paid untold dividends in the form of a salary I wouldn't have the chance at if I didn't go to school.