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The incoming crash and inflation - debt
Posted on 5/12/21 at 5:39 am
Posted on 5/12/21 at 5:39 am
Is it better to have debt or pay things down for the expected crash?
5
Posted on 5/12/21 at 5:41 am to LSU6262
Debt
Posted on 5/12/21 at 5:50 am to LSU6262
Debt is an excellent hedge against inflation
Posted on 5/12/21 at 6:15 am to LSU6262
How much debt? Doesn’t seem smart to max out CCs.
Posted on 5/12/21 at 6:47 am to JayDeerTay84
Government and corporations are theoretically immortal entities. They’ll never intend to “pay back” debt. They’ll just issue new debt to refinance that and grow their earnings enough to pay the interest.
What will be concerning from our governments stand point is when the interest on debt becomes more than what we make (GDP).
What will be concerning from our governments stand point is when the interest on debt becomes more than what we make (GDP).
Posted on 5/12/21 at 6:51 am to JayDeerTay84
quote:
Doesn’t seem smart to max out CCs
I'm not talking about high interest credit card debt
Posted on 5/12/21 at 6:59 am to LSU6262
So like low interest personal loans etc?
Posted on 5/12/21 at 7:03 am to JayDeerTay84
Anything with a variable rate will have its interest rate adjusted up. A fixed rate loan or mortgage is ideal.
Think through the scenario.
Think through the scenario.
Posted on 5/12/21 at 7:06 am to iAmBatman
When is the right time for something like this? Do you wait until interest rates start to rise or just apply for a LOC and hold on until it hits?
Posted on 5/12/21 at 7:13 am to JayDeerTay84
This, I was in the market for a new home and due to the security a 30yr fixed loan @ 2.8% provides, we decided to purchase a home towards the top of our budget.
Posted on 5/12/21 at 7:26 am to JayDeerTay84
quote:
How much debt? Doesn’t seem smart to max out CCs.
When they say debt they do not mean loan sharks or gambling debt either. You picked the absolute worst debt when asking the question. Good debt is a hedge against inflation, which is debt for assets like houses, real estate, etc.
Posted on 5/12/21 at 7:28 am to go ta hell ole miss
Right. “Appreciable” assets.
Posted on 5/12/21 at 7:33 am to JayDeerTay84
quote:
When is the right time for something like this?
Before the inflation actually hits.
Now if you asking me for a specific time, then if I actually knew that, I wouldn’t be posting as Batman on an LSU message board.
Posted on 5/12/21 at 7:38 am to LSU6262
Debt. Coupled with low interest rates I would move to the most expensive,nearest, safest suburb/small town ASAP.
Posted on 5/12/21 at 7:56 am to iAmBatman
quote:
Debt is an excellent hedge against inflation
This is true assuming your wages also keep up with inflation. There was a period during the financial crisis where this wasn't the case so the inflation hedge via your mortgage would've been marginal.
Posted on 5/12/21 at 8:00 am to FinleyStreet
quote:
This is true assuming your wages also keep up with inflation
I have a feeling my paycheck would lag the inflation by quite a while. Not like we can automatically charge clients double because goods and services are through the roof.
Posted on 5/12/21 at 8:04 am to Shepherd88
quote:
What will be concerning from our governments stand point is when the interest on debt becomes more than what we make (GDP)
I saw years in NYC after the Linsey spending binge on social programs where such a huge portion of tax revenue went to debt service that they simply stopped maintaining, roads, bridges, government buildings and subways. Of course, they didn't lay off anyone in the bloated government agencies.
Posted on 5/12/21 at 8:06 am to iAmBatman
quote:
Now if you asking me for a specific time
Last year was the ideal time.
Posted on 5/12/21 at 8:08 am to FinleyStreet
quote:
This is true assuming your wages also keep up with inflation. There was a period during the financial crisis where this wasn't the case so the inflation hedge via your mortgage would've been marginal.
Debt is good to have regardless of your paycheck. I wouldn’t go buy something you don’t need, but theoretically you would rather have the fixed rate debt, a house that is appreciating due to inflation, and the cash invested in something else too.
You want to leverage cash into as many appreciating assets as possible. Debt allows you to do that.
Posted on 5/12/21 at 8:21 am to LSU6262
If you think inflation is going to run wild, it is beneficial to have a lot of low interest debt.
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