8 ms·

"Living debt free is the worst advice you could give" What advice can one give me, an individual who does not wish to live the life of a tape worm?

mewpmewp2 3y ago
How does life of a tape worm connect with the idea?
- mrkeen 3y ago
  I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?
  - LargeTomato 3y ago
    4 kinds of people. 1. People who love taking advantage of capitalism. 2. People who begrudgingly take advantage of capitalism. 3. People who understand capitalism but pout about it. 4. People too stupid to understand capitalism.
    - dsr_ 3y ago
      At least 3 orthogonal axes, not 2. x: understanding capitalism y: success in capitalism z: supporting capitalism All of these are slightly correlated, but only in rough outline.
      - Grimblewald 3y ago
        I think we need one more axis, willingness to exploit others. Capitalism isn't inherently bad, but it is a problem when it has major flaws that allow for systematic an unintended avenues of exploitation. I support capitalism, I understand capitalism, and I have success in the system however I categorically refuse to partake in the smorgasbord of options for exploiting those who create value to live the life of a parasite. I take pride in my work and get compensated fairly, the work I do requires a lot of expertise and continued learning and development, something not everyone wants to do. My doing so provides significant value and that affords me some nicer things in life, but I do not agree that those who work more mundane jobs shouldn't be compensated such that they can live comfortably. The system only works if everyone who works full-time hours can life a comfortable life. The moment full-time work does not buy you comfort and security, the system rapidly becomes one that survives of the backs of slaves.
  - scotty79 3y ago
    > Society is built from people producing economic output. That's a very idealistic image. People producing economic output are a not that large fraction of society. There are a lot of people in the society who are useless or harmful from the point of view of economic output. Military, advertising, retirees, children and full-time learners, significant fraction of bureaucrats and political class, successful rent seekers. They are all part of society. I don't have the numbers but I think, altogether they are majority.
    - rmbyrro 3y ago
      Isn't that a cynical view of society?
      - scotty79 3y ago
        Doesn't mean it's wrong. Besides, it only sounds bad if you care about economic output and give it a moral value.
        mping 3y ago
        It's woefully short sighted, as it misses the long-term prospect of economic output, as most classes of people you mentioned provide some economic benefit in one way or another. Cynicism should be precise, in my opinion.
        scotty79 3y ago
        You can swing to the opposite end of the spectrum and argue that everybody is economically useful indirectly to the point that any meaningful definition of economic utility is gone. I think emotional opposition to what I wrote comes mainly from the fact that people tend to give moral valuation to economic usefulness. If you are not useful, you are bad. And since they don't want to think about large amount of people as bad, cognitive dissonance arises and forces them to extend the definition of economic utility till they feel comfortable again. Till they narrowed down the amount of bad people to fit their comfortable world view. I think much healthier way is to say that economic utility and morality are orthogonal and it's perfectly fine that retirees or learners don't have economical utility without any additional justifications. This approach allows making moral judgements more freely and accurately. In this framework, being economically useful can't be used to cover immoral behavior and lack of usefulness can't be used to stigmatize perfectly harmless people or even those useful in other ways.
  - lnxg33k1 3y ago
    Society is built on people exploiting those producing economic output, the whole system is based on parasites, cmon at least let’s try to don’t think others are idiots (or be naive) when talking about capitalism > But this guy just buys low, sells high, and uses other people's money to do so? Some people call it capitalism
  - itsoktocry 3y ago
    >and uses other people's money to do so? Other people who entrust him with their money, and expect a return. It's not like he's stealing it, and I'd argue he's the one doing the most work in that transaction.
    - mrkeen 3y ago
      He sounds like you should not entrust money to him: > “If I go bust, the bank goes bust,” he added. “Not my problem.”
  - is_true 3y ago
    I used to think like you, but then I learned about market makers. If you would need to sell something in a time there aren't many buyers and you needed the money, that kind of people can help you liquidate your asset. A lot of the times this happens because people make bad investments, but I'm not sure it's his fault.
    - HenryBemis 3y ago
      Dave Ramsey keeps saying that he never buys on 'fair price'. He always buys low/cheap. Being super patient is also a key attribute for financial success.
  - mewpmewp2 3y ago
    Buying low, selling high does produce economic output. It funnels money into causes that generate economic output. If you are able to buy low and sell high you must have some ability to tell the promise of something and if you buy low you are making the promise be more efficient. There's a vector of progress in some direction and you are deciding the direction by choosing what you are investing in. And if you are using other people's money you are just increasing the power of the vector in the right direction by more than you could have on your own. So if you have that ability, it's a very wise thing to do. Money is a tool to organise/decide where the direction should be at and magnify that direction.
    - Grimblewald 3y ago
      Market forces only work when no individual or even large groups of individuals control enough capital to influence market trends, the problem is because of the dismantling of capital gains taxes etc. we have exactly that. We live in a state of affairs where individuals own over 80% of rental properties in entire suburbs. They can then do whatever they like with rent, since there is no such thing as market forces in those areas. They then collude with similar individuals in surrounding areas and create an unregulated monopoly. How do you propose that is beneficial?
- Grimblewald 3y ago
  Money is a tool that lets us track the goods and services we are throwing on the communal pile. You can trade money you've been given to take things from the pile as needed. The problem is some people get so much money through unintended glitches in the system that they can take so much of the pile that significant portions of the population are left without. This man, and people like him are tape worms and I want nothing to do with it. I don't want to live a life of struggle or suffering, but I don't want my life of ease to be at someone else's expense.
Mo3 3y ago
He's talking about debt to purchase cash flow generating assets, not consumer debt.
fakedang 3y ago
> While he recommends leveraging debt to buy assets, he disapproves of taking out a loan to buy materialistic items that won’t increase in value or pay dividends. > “A lot of people use debt to buy liabilities,” he said. “I drive a Ferrari. Guess what? It’s paid off 100% because it’s a liability. I drive a Rolls-Royce. It’s paid off 100% because it’s a liability.” There's your answer. And this is actually sound advice. You don't want to accrue interest payments on depreciables. But in the current money printing macro environment, it makes sense to leverage, depending on your time horizon and the prevailing interest rates.
- al_borland 3y ago
  Which means for the average person, where nearly all their purchases are liabilities, telling people to live debt free is good advice and Kiyosaki quotes getting thrown around out of context do more harm than good. I’m also curious to see how all these debt gluttons using “OPM” are going to fair in an environment of rising interest rates. When the tide goes out we’ll see who was swimming naked. I’m sure we’ll see many people get humbled.
  - LargeTomato 3y ago
    That's right, almost everything you buy is a financial liability. Debt glutton is a very loaded term. I bought 2 houses in the pandemic but I did so thoughtfully, after much research. My income can fully cover both mortgages and living expenses. In the US, interest rates are usually locked in and the monthly payment on the mortgage is not affected by the rates of today. Everyone I know who did "the real estate thing" is playing the long game. All of our assets are illiquid for now and that's okay. There are always reckless people, unlucky people, foolish people. But vilifying debt is not the answer.
    - dgellow 3y ago
      The lesson I remember learning from 2008 was that a really, really large part of the population is foolish and reckless. On both sides, not only buyers. What if you’re the exception here instead of the norm?
rmbyrro 3y ago
His debt doesn't fund consumption, it funds real estate, which he rents or sells for a profit. He's not advocating to go into debt for a lush Bahamas vacation. The value of long-term debt to fund real assets is that inflation corrodes the debt value, while boosting the asset value. Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate.
- itsoktocry 3y ago
  >Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate. It's a shame that lending institutions also understand this and attempt to set their lending rates accordingly.
  - rmbyrro 3y ago
    They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin air. When a lender pays interest, even if it's below inflation rate, banks still make profit, because they didn't have to put any real assets, so the opportunity cost is zero.
- dvh 3y ago
  Stupid me. I was using money to buy food the whole time.
  - HenryBemis 3y ago
    Good sarcasm :) I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around. I follow a mix of "7 accounts.." (https://www.youtube.com/watch?v=auzLhKvsxnQ https://www.youtube.com/watch?v=auzLhKvsxnQ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save more than I should (I 'live less'). This is a principle you can do irrespective of the amount (as long as it's over €$1000). I don't mind changing phones every 3 years, and put those $200 to work for me instead of the other way round.

mewpmewp2 3y ago

How does life of a tape worm connect with the idea?

mrkeen 3y ago
I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?
- LargeTomato 3y ago
  4 kinds of people. 1. People who love taking advantage of capitalism. 2. People who begrudgingly take advantage of capitalism. 3. People who understand capitalism but pout about it. 4. People too stupid to understand capitalism.
  - dsr_ 3y ago
    At least 3 orthogonal axes, not 2. x: understanding capitalism y: success in capitalism z: supporting capitalism All of these are slightly correlated, but only in rough outline.
    - Grimblewald 3y ago
      I think we need one more axis, willingness to exploit others. Capitalism isn't inherently bad, but it is a problem when it has major flaws that allow for systematic an unintended avenues of exploitation. I support capitalism, I understand capitalism, and I have success in the system however I categorically refuse to partake in the smorgasbord of options for exploiting those who create value to live the life of a parasite. I take pride in my work and get compensated fairly, the work I do requires a lot of expertise and continued learning and development, something not everyone wants to do. My doing so provides significant value and that affords me some nicer things in life, but I do not agree that those who work more mundane jobs shouldn't be compensated such that they can live comfortably. The system only works if everyone who works full-time hours can life a comfortable life. The moment full-time work does not buy you comfort and security, the system rapidly becomes one that survives of the backs of slaves.
- scotty79 3y ago
  > Society is built from people producing economic output. That's a very idealistic image. People producing economic output are a not that large fraction of society. There are a lot of people in the society who are useless or harmful from the point of view of economic output. Military, advertising, retirees, children and full-time learners, significant fraction of bureaucrats and political class, successful rent seekers. They are all part of society. I don't have the numbers but I think, altogether they are majority.
  - rmbyrro 3y ago
    Isn't that a cynical view of society?
    - scotty79 3y ago
      Doesn't mean it's wrong. Besides, it only sounds bad if you care about economic output and give it a moral value.
      - mping 3y ago
        It's woefully short sighted, as it misses the long-term prospect of economic output, as most classes of people you mentioned provide some economic benefit in one way or another. Cynicism should be precise, in my opinion.
        scotty79 3y ago
        You can swing to the opposite end of the spectrum and argue that everybody is economically useful indirectly to the point that any meaningful definition of economic utility is gone. I think emotional opposition to what I wrote comes mainly from the fact that people tend to give moral valuation to economic usefulness. If you are not useful, you are bad. And since they don't want to think about large amount of people as bad, cognitive dissonance arises and forces them to extend the definition of economic utility till they feel comfortable again. Till they narrowed down the amount of bad people to fit their comfortable world view. I think much healthier way is to say that economic utility and morality are orthogonal and it's perfectly fine that retirees or learners don't have economical utility without any additional justifications. This approach allows making moral judgements more freely and accurately. In this framework, being economically useful can't be used to cover immoral behavior and lack of usefulness can't be used to stigmatize perfectly harmless people or even those useful in other ways.
- lnxg33k1 3y ago
  Society is built on people exploiting those producing economic output, the whole system is based on parasites, cmon at least let’s try to don’t think others are idiots (or be naive) when talking about capitalism > But this guy just buys low, sells high, and uses other people's money to do so? Some people call it capitalism
- itsoktocry 3y ago
  >and uses other people's money to do so? Other people who entrust him with their money, and expect a return. It's not like he's stealing it, and I'd argue he's the one doing the most work in that transaction.
  - mrkeen 3y ago
    He sounds like you should not entrust money to him: > “If I go bust, the bank goes bust,” he added. “Not my problem.”
- is_true 3y ago
  I used to think like you, but then I learned about market makers. If you would need to sell something in a time there aren't many buyers and you needed the money, that kind of people can help you liquidate your asset. A lot of the times this happens because people make bad investments, but I'm not sure it's his fault.
  - HenryBemis 3y ago
    Dave Ramsey keeps saying that he never buys on 'fair price'. He always buys low/cheap. Being super patient is also a key attribute for financial success.
- mewpmewp2 3y ago
  Buying low, selling high does produce economic output. It funnels money into causes that generate economic output. If you are able to buy low and sell high you must have some ability to tell the promise of something and if you buy low you are making the promise be more efficient. There's a vector of progress in some direction and you are deciding the direction by choosing what you are investing in. And if you are using other people's money you are just increasing the power of the vector in the right direction by more than you could have on your own. So if you have that ability, it's a very wise thing to do. Money is a tool to organise/decide where the direction should be at and magnify that direction.
  - Grimblewald 3y ago
    Market forces only work when no individual or even large groups of individuals control enough capital to influence market trends, the problem is because of the dismantling of capital gains taxes etc. we have exactly that. We live in a state of affairs where individuals own over 80% of rental properties in entire suburbs. They can then do whatever they like with rent, since there is no such thing as market forces in those areas. They then collude with similar individuals in surrounding areas and create an unregulated monopoly. How do you propose that is beneficial?
Grimblewald 3y ago
Money is a tool that lets us track the goods and services we are throwing on the communal pile. You can trade money you've been given to take things from the pile as needed. The problem is some people get so much money through unintended glitches in the system that they can take so much of the pile that significant portions of the population are left without. This man, and people like him are tape worms and I want nothing to do with it. I don't want to live a life of struggle or suffering, but I don't want my life of ease to be at someone else's expense.

Mo3 3y ago

He's talking about debt to purchase cash flow generating assets, not consumer debt.

fakedang 3y ago

> While he recommends leveraging debt to buy assets, he disapproves of taking out a loan to buy materialistic items that won’t increase in value or pay dividends. > “A lot of people use debt to buy liabilities,” he said. “I drive a Ferrari. Guess what? It’s paid off 100% because it’s a liability. I drive a Rolls-Royce. It’s paid off 100% because it’s a liability.” There's your answer. And this is actually sound advice. You don't want to accrue interest payments on depreciables. But in the current money printing macro environment, it makes sense to leverage, depending on your time horizon and the prevailing interest rates.

al_borland 3y ago
Which means for the average person, where nearly all their purchases are liabilities, telling people to live debt free is good advice and Kiyosaki quotes getting thrown around out of context do more harm than good. I’m also curious to see how all these debt gluttons using “OPM” are going to fair in an environment of rising interest rates. When the tide goes out we’ll see who was swimming naked. I’m sure we’ll see many people get humbled.
- LargeTomato 3y ago
  That's right, almost everything you buy is a financial liability. Debt glutton is a very loaded term. I bought 2 houses in the pandemic but I did so thoughtfully, after much research. My income can fully cover both mortgages and living expenses. In the US, interest rates are usually locked in and the monthly payment on the mortgage is not affected by the rates of today. Everyone I know who did "the real estate thing" is playing the long game. All of our assets are illiquid for now and that's okay. There are always reckless people, unlucky people, foolish people. But vilifying debt is not the answer.
  - dgellow 3y ago
    The lesson I remember learning from 2008 was that a really, really large part of the population is foolish and reckless. On both sides, not only buyers. What if you’re the exception here instead of the norm?

rmbyrro 3y ago

His debt doesn't fund consumption, it funds real estate, which he rents or sells for a profit. He's not advocating to go into debt for a lush Bahamas vacation. The value of long-term debt to fund real assets is that inflation corrodes the debt value, while boosting the asset value. Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate.

itsoktocry 3y ago
>Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate. It's a shame that lending institutions also understand this and attempt to set their lending rates accordingly.
- rmbyrro 3y ago
  They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin air. When a lender pays interest, even if it's below inflation rate, banks still make profit, because they didn't have to put any real assets, so the opportunity cost is zero.
dvh 3y ago
Stupid me. I was using money to buy food the whole time.
- HenryBemis 3y ago
  Good sarcasm :) I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around. I follow a mix of "7 accounts.." (https://www.youtube.com/watch?v=auzLhKvsxnQ https://www.youtube.com/watch?v=auzLhKvsxnQ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save more than I should (I 'live less'). This is a principle you can do irrespective of the amount (as long as it's over €$1000). I don't mind changing phones every 3 years, and put those $200 to work for me instead of the other way round.