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I think you may be missing the qualifier that actually makes this advice true. >But going into debt for a depreciating asset like a car is a bad idea, yes. It

I think you may be missing the qualifier that actually makes this advice true. >But going into debt for a depreciating asset like a car is a bad idea, yes. It's important to not go into debt for frivoulous consumption. If you buy an old car, it actually doesn't depreciate very much as long as it's kept in working order. The same with a computer, if I go into debt to get the new M1 Max because I need a computer to code, that's not very smart. I can code just fine on a $300 used ThinkPad, and I can travel just fine on a $4000 used car. If I'm unfortunate enough to really need either of those for income geneartion but can't afford it, then it makes sense to borrow for it, but only to get the minimum you need to get the work done. Of course it's much more fun to get a newish F150 and the latest Apple gadget on a 96 month loan...

CPLX 5y ago
The problem is that qualifier isn't correct. The test needs another qualifier, it should be a depreciating, non productive asset. Many assets that are incredibly productive depreciate. If you're making a living as a house painter you definitely want to invest in paint brushes rather than smearing the paint all over the walls with your hands. The fact that the brushes wear out pretty quickly is irrelevant. Same goes for an auto mechanic buying sets of wrenches, and possibly the developer getting a much faster computer that increases their productivity. Fact is that owning a reliable car is a prerequisite to many jobs and living situations. The advice is usually given around consumption type "assets". Like don't go into debt to buy a jetski or golf clubs or something. It's a mistake to transfer that logic to productive assets.
- toxik 5y ago
  You don’t take a loan to buy paint brushes, you may take a loan to bootstrap a painting business - the business is not depreciating. I agree though, you’d take a loan to buy eg a CNC mill, and you’d expect it to depreciate. On the other hand, you could buy a CNC mill second hand and avoid the large initial depreciation.
- Swenrekcah 5y ago
  Yes that's correct of course, I have always only considered this as personal advice, not a buisness advice.

CPLX 5y ago

The problem is that qualifier isn't correct. The test needs another qualifier, it should be a depreciating, non productive asset. Many assets that are incredibly productive depreciate. If you're making a living as a house painter you definitely want to invest in paint brushes rather than smearing the paint all over the walls with your hands. The fact that the brushes wear out pretty quickly is irrelevant. Same goes for an auto mechanic buying sets of wrenches, and possibly the developer getting a much faster computer that increases their productivity. Fact is that owning a reliable car is a prerequisite to many jobs and living situations. The advice is usually given around consumption type "assets". Like don't go into debt to buy a jetski or golf clubs or something. It's a mistake to transfer that logic to productive assets.

toxik 5y ago
You don’t take a loan to buy paint brushes, you may take a loan to bootstrap a painting business - the business is not depreciating. I agree though, you’d take a loan to buy eg a CNC mill, and you’d expect it to depreciate. On the other hand, you could buy a CNC mill second hand and avoid the large initial depreciation.
Swenrekcah 5y ago
Yes that's correct of course, I have always only considered this as personal advice, not a buisness advice.