4 ms·

being debt assumes appreciation on the asset you are holding under that debt which has been artificially inflated by the governments for yeeeeears now. you woul

being debt assumes appreciation on the asset you are holding under that debt which has been artificially inflated by the governments for yeeeeears now. you would never hold a debt on the house (even at 3.5%) if the house stayed the same price the day of the purchase and date of the sale. too many people are saying “some debt is good/great” which is only marginally true if you make certain assumptions which is exactly what they are - assumptions.

zajio1am 6mo ago
Even if the house prices stayed the same, it would make sense to keep the low interest debt and invest in other assets that have higher yield, like shares.
- bdangubic 6mo ago
  this again assumes a lot… it assumes that you can make up the money you are donating to lenders with some ficticious higher yield investments. I’d ballpark less that 5% of people would make out on the positive side of this.
jandrewrogers 6mo ago
> being debt assumes appreciation on the asset No it doesn't. The math works out the same regardless of changes in asset value. Paying cash has significant opportunity and liquidity costs. These can often exceed the cost of debt.
- bdangubic 6mo ago
  I had mortage on a condo for $460k. total money paid to pay it off via debt, little over $1m. I sell 30 years later for $460k I just lost $550k :) (I didn’t, paid it off in 5 years saving myself 100’s of thousands …) ask yourself why “we” think that some debt (e.g. real estate) is great) while others (e.g. vehicle) is bad? it just might ge that one is looked at as appreciating asset while the other not so much. comments like yours always remind of the stripper scene from the movie “big short” having debt also makes you a forever slave (true capitalism at work). God forbid you lose your source(s) of income and don’t have FU money or significant stash, now you fucked. with no debt and roof over your head life is infinitely better even during trying times..
  - jandrewrogers 6mo ago
    You aren't making a consistent or coherent argument. The math of e.g. interest rate arbitrage doesn't care whether you are buying a house or a car, you will profit the same regardless. In many cases the risk is literally zero, the scenarios you are imagining where it has bad consequences don't exist as a real thing that can happen. If you have enough money to pay cash then you also have enough money to pay off the equivalent debt at any time of your convenience. Many people believe many things that are not based in physical reality. Many popular beliefs about debt are no different and debt has no intrinsic moral significance.
    - Mr_Minderbinder 6mo ago
      > In many cases the risk is literally zero... I presume this is hyperbole and that what you mean is almost or very near zero.
  - bmm6o 6mo ago
    Let's say that each month I have an extra $1000. Should I use that money to pay down a 4% mortgage, or should I invest it in an index fund that is all but guaranteed to earn more than that?
    - bdangubic 6mo ago
      > that is all but guaranteed to earn more than that? say SP500 nominal avg is around 10% - no brainer, yes? but that is an avg of many 30-year windows. some 30-year windows might not be that kind to you. market crash in say first 5-6 years will hurt you a lot so there is just no certainty here except we think (just like we expect appreciation on the house) we’ll end up on the “right” side of this. and of course not to mention the most obvious, roughly 99.56% of people will not be investing this money to get more than 4%…

zajio1am 6mo ago

Even if the house prices stayed the same, it would make sense to keep the low interest debt and invest in other assets that have higher yield, like shares.

bdangubic 6mo ago
this again assumes a lot… it assumes that you can make up the money you are donating to lenders with some ficticious higher yield investments. I’d ballpark less that 5% of people would make out on the positive side of this.

jandrewrogers 6mo ago

> being debt assumes appreciation on the asset No it doesn't. The math works out the same regardless of changes in asset value. Paying cash has significant opportunity and liquidity costs. These can often exceed the cost of debt.

bdangubic 6mo ago
I had mortage on a condo for $460k. total money paid to pay it off via debt, little over $1m. I sell 30 years later for $460k I just lost $550k :) (I didn’t, paid it off in 5 years saving myself 100’s of thousands …) ask yourself why “we” think that some debt (e.g. real estate) is great) while others (e.g. vehicle) is bad? it just might ge that one is looked at as appreciating asset while the other not so much. comments like yours always remind of the stripper scene from the movie “big short” having debt also makes you a forever slave (true capitalism at work). God forbid you lose your source(s) of income and don’t have FU money or significant stash, now you fucked. with no debt and roof over your head life is infinitely better even during trying times..
- jandrewrogers 6mo ago
  You aren't making a consistent or coherent argument. The math of e.g. interest rate arbitrage doesn't care whether you are buying a house or a car, you will profit the same regardless. In many cases the risk is literally zero, the scenarios you are imagining where it has bad consequences don't exist as a real thing that can happen. If you have enough money to pay cash then you also have enough money to pay off the equivalent debt at any time of your convenience. Many people believe many things that are not based in physical reality. Many popular beliefs about debt are no different and debt has no intrinsic moral significance.
  - Mr_Minderbinder 6mo ago
    > In many cases the risk is literally zero... I presume this is hyperbole and that what you mean is almost or very near zero.
- bmm6o 6mo ago
  Let's say that each month I have an extra $1000. Should I use that money to pay down a 4% mortgage, or should I invest it in an index fund that is all but guaranteed to earn more than that?
  - bdangubic 6mo ago
    > that is all but guaranteed to earn more than that? say SP500 nominal avg is around 10% - no brainer, yes? but that is an avg of many 30-year windows. some 30-year windows might not be that kind to you. market crash in say first 5-6 years will hurt you a lot so there is just no certainty here except we think (just like we expect appreciation on the house) we’ll end up on the “right” side of this. and of course not to mention the most obvious, roughly 99.56% of people will not be investing this money to get more than 4%…