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I remember receiving similar advice (take student loans, invest in stocks) from my high school accounting teacher. If "call your parents and humbly beg for $25k

by cbhl 3y ago

I remember receiving similar advice (take student loans, invest in stocks) from my high school accounting teacher. If "call your parents and humbly beg for $25k" is a valid "plan of last resort", then it's a lot less risky. A lot of people definitely should not try this. The levered gains quickly fall apart if you're not completely on top of deadlines for interest-free periods expiring and start owing 24.99%+ APY on five figure balances. If there's _any_ risk of that happening I'd stay the hell away from levered investments and reach for the automatic-monthly-credit-card-payments of Ramit Sethi's "I Will Teach You to be Rich". Another risk is the hedonic treadmill -- if you're used to an elevated standard of living in your early 20s, it can be hard to get out of levered spending later in life. Probably would need to choose friends carefully, and budget meticulously. But to the author's initial point -- I also do agree, in hindsight, that $25k of added consumption in my first years out of college would have materially made my life MUCH better -- a bit more travel/meals with friends that I "responsibly" chose to miss out on is not time that I will ever get back.

fzeindl 3y ago
> start owing 24.99%+ APY Why that specific number in your example. That looks like a supermarket price tag. Is that common in the US?
- Jetrel 3y ago
  Yep; tons of credit cards do usurious bait-and-switch stuff like that, under the express hope to make it up on people who have occasional "slippages" where they miss it by one pay period. The "siren song" on those is the whole "if you're careful you can cancel" trick the users think they're pulling off. They may individually, but not in aggregate. These cards are often much easier to get approved for.
piyh 3y ago
25k of added consumption saved would be 43k of interest gains in 15 years in his "line always go up" world view. 43k is over 6 month living expense for me, and I get to keep the initial 25k. I wish I would have spent more money in my 20s, but not 25k worth.

by cbhl 3y ago

fzeindl 3y ago

> start owing 24.99%+ APY Why that specific number in your example. That looks like a supermarket price tag. Is that common in the US?

Jetrel 3y ago
Yep; tons of credit cards do usurious bait-and-switch stuff like that, under the express hope to make it up on people who have occasional "slippages" where they miss it by one pay period. The "siren song" on those is the whole "if you're careful you can cancel" trick the users think they're pulling off. They may individually, but not in aggregate. These cards are often much easier to get approved for.

piyh 3y ago

25k of added consumption saved would be 43k of interest gains in 15 years in his "line always go up" world view. 43k is over 6 month living expense for me, and I get to keep the initial 25k. I wish I would have spent more money in my 20s, but not 25k worth.