4 ms·

The savings part sounds like advice from Mr. Money Mustache, there was discussion about his advice here before. "Never borrow money" would include never having

by muzz 13y ago

The savings part sounds like advice from Mr. Money Mustache, there was discussion about his advice here before. "Never borrow money" would include never having a mortgage, which would be a huge lost opportunity for many. Not to mention borrowing money to invest in oneself, start a business, etc.

JoshTriplett 13y ago
A mortgage is one of the few exceptions, and even then you should carefully consider whether renting or buying makes more sense. A car, notably, is not a good exception. Education depends heavily on return on investment; you'd want to carefully analyze how much more you'll make with that education, how long it'll take you to pay off the debt, etc. It can certainly make sense when attempting to bootstrap yourself if your alternative is no higher education at all, but if you're in a financial position where you have to borrow for tuition, you may well qualify for better options such as scholarships. If you're reasonably well off and borrowing to go to a higher-end school, that makes much less sense. And yes, the savings -> years to retirement table came from a Mr. Money Mustache article: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... .
- deleted 13y ago
  [deleted]
- tunesmith 13y ago
  The chart is also unrealistic since it relies on overly optimistic long term percentage averages.
pmorici 13y ago
Mr. Money Mustache's advice wasn't to never borrow money. He said the only reason to borrow money was to buy a house.
coldtea 13y ago
>would include never having a mortgage, which would be a huge lost opportunity for many A lost opportunity? If you can afford a house easily buy one, if you cannot afford it a mortage is anything but a huge opportunity. http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to-own-a-home-again/ http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to... http://www.jamesaltucher.com/2011/05/why-i-would-rather-shoot-myself-in-the-head-than-own-a-home/ http://www.jamesaltucher.com/2011/05/why-i-would-rather-shoo...
- sliverstorm 13y ago
  This advice seems to completely gloss over one key fact: You have to live somewhere. Seriously- if you didn't, buying a house would be a terrible investment! But you do, so the cost of owning a house needs to be compared to the cost of renting, instead of being discussed as a normal investment.
  - untog 13y ago
    Not sure why this is being downvoted. If you don't get mortgage, the presumption is that you aren't going to buy a house outright, either. You're going to rent, which isn't exactly an ideal situation in the long term.
    - sliverstorm 13y ago
      Haha yes, if you can buy a house outright, definitely do that. Unless, of course, you can land an incredibly low interest rate on your mortgage and have something interesting to do with your capitol, like fund your business.
  - coldtea 13y ago
    >the cost of owning a house needs to be compared to the cost of renting Emm, the linked articles get into exactly this.
- superuser2 13y ago
  Opportunity cost. $250,000 invested now could be substantially more by retirement than the cost of the mortgage over its lifetime.
jmharvey 13y ago
People frequently get themselves into serious financial trouble by borrowing money to "invest in themselves" or "start a business." On a case-by-case basis, these may actually be sound financial moves, but there are whole industries built on suckering people into making "investments" that aren't financially prudent.

by muzz 13y ago

JoshTriplett 13y ago

A mortgage is one of the few exceptions, and even then you should carefully consider whether renting or buying makes more sense. A car, notably, is not a good exception. Education depends heavily on return on investment; you'd want to carefully analyze how much more you'll make with that education, how long it'll take you to pay off the debt, etc. It can certainly make sense when attempting to bootstrap yourself if your alternative is no higher education at all, but if you're in a financial position where you have to borrow for tuition, you may well qualify for better options such as scholarships. If you're reasonably well off and borrowing to go to a higher-end school, that makes much less sense. And yes, the savings -> years to retirement table came from a Mr. Money Mustache article: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... .

deleted 13y ago
[deleted]
tunesmith 13y ago
The chart is also unrealistic since it relies on overly optimistic long term percentage averages.

pmorici 13y ago

Mr. Money Mustache's advice wasn't to never borrow money. He said the only reason to borrow money was to buy a house.

coldtea 13y ago

>would include never having a mortgage, which would be a huge lost opportunity for many A lost opportunity? If you can afford a house easily buy one, if you cannot afford it a mortage is anything but a huge opportunity. http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to-own-a-home-again/ http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to... http://www.jamesaltucher.com/2011/05/why-i-would-rather-shoot-myself-in-the-head-than-own-a-home/ http://www.jamesaltucher.com/2011/05/why-i-would-rather-shoo...

sliverstorm 13y ago
This advice seems to completely gloss over one key fact: You have to live somewhere. Seriously- if you didn't, buying a house would be a terrible investment! But you do, so the cost of owning a house needs to be compared to the cost of renting, instead of being discussed as a normal investment.
- untog 13y ago
  Not sure why this is being downvoted. If you don't get mortgage, the presumption is that you aren't going to buy a house outright, either. You're going to rent, which isn't exactly an ideal situation in the long term.
  - sliverstorm 13y ago
    Haha yes, if you can buy a house outright, definitely do that. Unless, of course, you can land an incredibly low interest rate on your mortgage and have something interesting to do with your capitol, like fund your business.
- coldtea 13y ago
  >the cost of owning a house needs to be compared to the cost of renting Emm, the linked articles get into exactly this.
superuser2 13y ago
Opportunity cost. $250,000 invested now could be substantially more by retirement than the cost of the mortgage over its lifetime.

jmharvey 13y ago

People frequently get themselves into serious financial trouble by borrowing money to "invest in themselves" or "start a business." On a case-by-case basis, these may actually be sound financial moves, but there are whole industries built on suckering people into making "investments" that aren't financially prudent.