4 ms·

I mean, I lived paycheck to paycheck last month after some unexpected large bills (May was a hell of a month!) but that was only because I didn't want to raid s

by pionar 4y ago

I mean, I lived paycheck to paycheck last month after some unexpected large bills (May was a hell of a month!) but that was only because I didn't want to raid savings. I don't have sympathy for folks making as much as we do who are "broke" or up to their ears in debt. If they're fortunate and privileged enough to get to our positions, they only brought it on themselves.

zionic 4y ago
>or up to their ears in debt See this depends. If the following are true: 1) The interest rate on your debt is below inflation 2) The cost to service the debt is a sufficiently low percentage of your monthly take home Then taking a loan is often MUCH smarter than buying it cash, because your cash can earn interest in excess of the loan interest in most scenarios. I know people with ten houses on 30-year 2.5% notes. They could pay them all off tomorrow but it wouldn't make sense financially.
- ivanche 4y ago
  Leverage is excellent in good times but horrible in bad ones. As they say, after an ebb you see who was swimming naked.
- bombcar 4y ago
  The risk that you may lose your job has to be considered in the equation, taking into account how "rare" your situation is (if you're work-from-home at $250k, will you be able to find that again, or will you have to move to get a similar income?) and how much savings you have. Remember, when you take a loan you have extremely large banks on the other side of your "great idea" so either they're incredibly stupid, or they can take into account more factors.
  - zionic 4y ago
    Sure, but you can always sell assets to cover expenses. Say you have $250k in diversified assets and a $500k note. In scenario A you put $250k and have no earning power, owing $250k. If you lose your job and foreclose that downpayment is lost. In scenario B you lose your job but you still have $250k on assets, you can draw on that to pay the $500k note as it comes due. You have options.
- deleted 4y ago
  [deleted]
krallja 4y ago
“I lived paycheck-to-paycheck, except I have savings” is a gross misunderstanding of the term.
- gizmo686 4y ago
  The article is talking about people who self report as living "paycheck-to-paycheck", which means the term means whatever the surveyed population feels like it means. If you want a more controlled responce, you need to ask more specific questions and classify the responces yourself.

by pionar 4y ago

zionic 4y ago

>or up to their ears in debt See this depends. If the following are true: 1) The interest rate on your debt is below inflation 2) The cost to service the debt is a sufficiently low percentage of your monthly take home Then taking a loan is often MUCH smarter than buying it cash, because your cash can earn interest in excess of the loan interest in most scenarios. I know people with ten houses on 30-year 2.5% notes. They could pay them all off tomorrow but it wouldn't make sense financially.

ivanche 4y ago
Leverage is excellent in good times but horrible in bad ones. As they say, after an ebb you see who was swimming naked.
bombcar 4y ago
The risk that you may lose your job has to be considered in the equation, taking into account how "rare" your situation is (if you're work-from-home at $250k, will you be able to find that again, or will you have to move to get a similar income?) and how much savings you have. Remember, when you take a loan you have extremely large banks on the other side of your "great idea" so either they're incredibly stupid, or they can take into account more factors.
- zionic 4y ago
  Sure, but you can always sell assets to cover expenses. Say you have $250k in diversified assets and a $500k note. In scenario A you put $250k and have no earning power, owing $250k. If you lose your job and foreclose that downpayment is lost. In scenario B you lose your job but you still have $250k on assets, you can draw on that to pay the $500k note as it comes due. You have options.
deleted 4y ago
[deleted]

krallja 4y ago

“I lived paycheck-to-paycheck, except I have savings” is a gross misunderstanding of the term.

gizmo686 4y ago
The article is talking about people who self report as living "paycheck-to-paycheck", which means the term means whatever the surveyed population feels like it means. If you want a more controlled responce, you need to ask more specific questions and classify the responces yourself.