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Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financia

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

dnadler 7y ago
Debt is a very useful tool for raising capital. It is a way to raise money without selling ownership, and is often the wiser choice. It all depends on the situation. Blanket statements disparaging (or encouraging) debt without regards to the situation are dumb.
shin_lao 7y ago
Debt is one of the financial tools at your disposal. Properly used, it's extremely powerful.
sykick 7y ago
When you say, "Debt is dumb" are you speaking in hyperbole? There are lots of examples where debt is not dumb and is in fact the prudent thing to do. If you aren't speaking in hyperbole you are wrong and if you are I suggest that in this case you shouldn't. Your overall point appears to be that a repeat of 2008 is immanent and this point can be better made without the "Debt is dumb" first sentence.
- deleted 7y ago
  [deleted]
- ghastmaster 7y ago
  It certainly was hyperbole. There are obvious situations where debt is not dumb. We live in a time where the vast majority of debt is not used for those obvious critical situations.
ryanlol 7y ago
>Debt is dumb. This attitude is dumb.
kevingadd 7y ago
How do you propose solving problems like "buy a house" and "buy a car" without debt? The average person who needs to drive to work has no way to buy a car in cash, at least not early on. If you drop all your savings on a new car and suddenly end up with a hospital bill, that car isn't going to pay for it. I say this as someone who had enough saved to buy a car in cash: Buying it via a loan was the right choice. It boosted my credit rating and more importantly when emergencies came up I had that cash on hand.
- zepto 7y ago
  Agree with you - although the part about boosting your credit rating, although true, is a scam.
- Psyladine 7y ago
  Rent, and, 'cars are bad'. This is written from an urbanist perspective. If you mean it can't scale, well, yes, its target is silicon valley devs. Either rich enough where it doesnt matter, or poor enough where it doesn't matter.
- ghastmaster 7y ago
  Look up the word "savings". It is possible to rent a cheap apartment, buy a used car, and wait until you can afford better things. Obviously some people are going to run into financial difficulties if they have unexpected extraordinary bills. The vast majority of things in life are however, expected. Nothing is new under the sun. The overwhelming debt of the world increases costs. Additionally, debt temporarily tricks most people into thinking they have more than they actually do. I think more people would be interested in working harder for better jobs or opportunities if it wasn't so easy to get whatever you want by signing a piece of paper.
  - kevingadd 7y ago
    How do I rent a cheap apartment and buy a used car without a job? The job I need a car to drive to? What am I supposed to save, exactly? The allowance I get from my presumably rich parents? In my case, my first job (at 14) required getting a ride to from a coworker with a car. Getting to university for my job working in the computer lab + my courses required either a car ride from a neighbor or 3 hours on the bus. After I moved away for my first salaried job, I needed a loan (thankfully a personal one and not from a bank - both of which are things many people don't have access to!) to cover my first month of expenses so I could move and actually start getting paid and building measurable savings, since the move already exhausted the savings I had left over after uni. Money doesn't come out of thin air. Not everyone starts their working life with access to enough money to just buy a car (even used!) and rent an apartment.
axegon_ 7y ago
> 2008 is coming again soon I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale), same with Ukraine and Venezuela, Russia(still going 5 years later), Brazil and those are just off the top of my head. What I'm trying to say is that financial crisis occur almost every year. Keeping your finances tidy is a good life advise but prophecies shouldn't be the motivation for it.
- onetimemanytime 7y ago
  >>I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. US is back on top. How's Italy, Greece, Spain etc doing?
  - hobs 7y ago
    I dont know why this is downvoted - the EU implemented austerity and it took a gigantic chunk out of its economy in the last ten years - why is this controversial? Spain's growth rate has been what, 0%? Greece is totally screwed, and there's a strong set of evidence to say Brexit was a direct result of the 2008 crisis (because they pushed back so hard on austerity.)
    - axegon_ 7y ago
      > there's a strong set of evidence to say Brexit was a direct result of the 2008 crisis. Nah. The only selling point on the referendum was immigration. The only one people really cared about anyway.
      - Wildgoose 7y ago
        A lot of people cared about Democracy and the ability to hold the politicians we elected accountable for the decisions that were made. Mass immigration was important, but it wasn't the only factor.
kaliali 7y ago
Debt can be useful to quickly get capital to grow a business. The problem is that everyone is competing to grow their business faster and so the amount of debt steadily climbs faster and faster than being able to pay the interest. New businesses who gather debt in a more controlled way will look like they aren't growing as fast (if loans were the primary source of funding) and they are quickly left for the companies that grow fast. Luckily, VCs take responsibility with their investments and make it possible for a new business to not need to go into crazy amounts of debt. Eventually, so much debt will be accumulated that companies will not be able to pay off the interest and the bubble pops. If everyone is always in debt, there will always be a periodic crash.
sbmthakur 7y ago
Debt is not dumb. Managing your debt in a bad way is dumb. You may want to see the following illustration by Ray Dalio about how debt complements the economy: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0
satya71 7y ago
Finance 101: debt is cheaper than equity. Arguably in today's model it's actually less risky than equity for the founders.
jariel 7y ago
"Business debt is just as dangerous as personal debt." They are barely related to the point they should probably even be called different things. Business debt is to buy equipment to make stuff to sell at a profit. Personal debt to buy a nice boat.
- ghastmaster 7y ago
  The end goal is the same. The boat. I see no difference.

dnadler 7y ago

Debt is a very useful tool for raising capital. It is a way to raise money without selling ownership, and is often the wiser choice. It all depends on the situation. Blanket statements disparaging (or encouraging) debt without regards to the situation are dumb.

shin_lao 7y ago

Debt is one of the financial tools at your disposal. Properly used, it's extremely powerful.

sykick 7y ago

When you say, "Debt is dumb" are you speaking in hyperbole? There are lots of examples where debt is not dumb and is in fact the prudent thing to do. If you aren't speaking in hyperbole you are wrong and if you are I suggest that in this case you shouldn't. Your overall point appears to be that a repeat of 2008 is immanent and this point can be better made without the "Debt is dumb" first sentence.

deleted 7y ago
[deleted]
ghastmaster 7y ago
It certainly was hyperbole. There are obvious situations where debt is not dumb. We live in a time where the vast majority of debt is not used for those obvious critical situations.

ryanlol 7y ago

>Debt is dumb. This attitude is dumb.

kevingadd 7y ago

How do you propose solving problems like "buy a house" and "buy a car" without debt? The average person who needs to drive to work has no way to buy a car in cash, at least not early on. If you drop all your savings on a new car and suddenly end up with a hospital bill, that car isn't going to pay for it. I say this as someone who had enough saved to buy a car in cash: Buying it via a loan was the right choice. It boosted my credit rating and more importantly when emergencies came up I had that cash on hand.

zepto 7y ago
Agree with you - although the part about boosting your credit rating, although true, is a scam.
Psyladine 7y ago
Rent, and, 'cars are bad'. This is written from an urbanist perspective. If you mean it can't scale, well, yes, its target is silicon valley devs. Either rich enough where it doesnt matter, or poor enough where it doesn't matter.
ghastmaster 7y ago
Look up the word "savings". It is possible to rent a cheap apartment, buy a used car, and wait until you can afford better things. Obviously some people are going to run into financial difficulties if they have unexpected extraordinary bills. The vast majority of things in life are however, expected. Nothing is new under the sun. The overwhelming debt of the world increases costs. Additionally, debt temporarily tricks most people into thinking they have more than they actually do. I think more people would be interested in working harder for better jobs or opportunities if it wasn't so easy to get whatever you want by signing a piece of paper.
- kevingadd 7y ago
  How do I rent a cheap apartment and buy a used car without a job? The job I need a car to drive to? What am I supposed to save, exactly? The allowance I get from my presumably rich parents? In my case, my first job (at 14) required getting a ride to from a coworker with a car. Getting to university for my job working in the computer lab + my courses required either a car ride from a neighbor or 3 hours on the bus. After I moved away for my first salaried job, I needed a loan (thankfully a personal one and not from a bank - both of which are things many people don't have access to!) to cover my first month of expenses so I could move and actually start getting paid and building measurable savings, since the move already exhausted the savings I had left over after uni. Money doesn't come out of thin air. Not everyone starts their working life with access to enough money to just buy a car (even used!) and rent an apartment.

axegon_ 7y ago

> 2008 is coming again soon I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale), same with Ukraine and Venezuela, Russia(still going 5 years later), Brazil and those are just off the top of my head. What I'm trying to say is that financial crisis occur almost every year. Keeping your finances tidy is a good life advise but prophecies shouldn't be the motivation for it.

onetimemanytime 7y ago
>>I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. US is back on top. How's Italy, Greece, Spain etc doing?
- hobs 7y ago
  I dont know why this is downvoted - the EU implemented austerity and it took a gigantic chunk out of its economy in the last ten years - why is this controversial? Spain's growth rate has been what, 0%? Greece is totally screwed, and there's a strong set of evidence to say Brexit was a direct result of the 2008 crisis (because they pushed back so hard on austerity.)
  - axegon_ 7y ago
    > there's a strong set of evidence to say Brexit was a direct result of the 2008 crisis. Nah. The only selling point on the referendum was immigration. The only one people really cared about anyway.
    - Wildgoose 7y ago
      A lot of people cared about Democracy and the ability to hold the politicians we elected accountable for the decisions that were made. Mass immigration was important, but it wasn't the only factor.

kaliali 7y ago

Debt can be useful to quickly get capital to grow a business. The problem is that everyone is competing to grow their business faster and so the amount of debt steadily climbs faster and faster than being able to pay the interest. New businesses who gather debt in a more controlled way will look like they aren't growing as fast (if loans were the primary source of funding) and they are quickly left for the companies that grow fast. Luckily, VCs take responsibility with their investments and make it possible for a new business to not need to go into crazy amounts of debt. Eventually, so much debt will be accumulated that companies will not be able to pay off the interest and the bubble pops. If everyone is always in debt, there will always be a periodic crash.

sbmthakur 7y ago

Debt is not dumb. Managing your debt in a bad way is dumb. You may want to see the following illustration by Ray Dalio about how debt complements the economy: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0

satya71 7y ago

Finance 101: debt is cheaper than equity. Arguably in today's model it's actually less risky than equity for the founders.

jariel 7y ago

"Business debt is just as dangerous as personal debt." They are barely related to the point they should probably even be called different things. Business debt is to buy equipment to make stuff to sell at a profit. Personal debt to buy a nice boat.

ghastmaster 7y ago
The end goal is the same. The boat. I see no difference.