Comments on: Ask Adrienne: Money 2 – Debt http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/ Thought is the only matter Tue, 06 Jan 2009 22:25:51 +0000 http://wordpress.org/?v=2.6.3 By: Adventurous Philosopher » Blog Archive » Ask Adrienne: Money 3 – Saving http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-17 Adventurous Philosopher » Blog Archive » Ask Adrienne: Money 3 – Saving Sun, 06 May 2007 19:34:40 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-17 [...] Adventurous Philosopher Thought is the only matter var sc_project=2403862; var sc_invisible=0; var sc_partition=22; var sc_security="dd3c29d3"; var sc_remove_link=1; « Ask Adrienne: Money 2 – Debt [...] [...] Adventurous Philosopher Thought is the only matter var sc_project=2403862; var sc_invisible=0; var sc_partition=22; var sc_security=”dd3c29d3″; var sc_remove_link=1; « Ask Adrienne: Money 2 – Debt [...]

]]> By: Adrienne http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-12 Adrienne Tue, 01 May 2007 00:22:53 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-12 No worries. It provides a nice transition to the next post. You're completely right. We don't reward saving, investments, or planning for the future nearly as much as we should. Heck, our very economy is based off debt (look how much in debt the US government is). It worries we as well the amount of people who rely on the equity of a house going up so they can take money out to live. Unfortunately, this trend seems to be increasing. America seriously needs a money wake up. Adrienne :) No worries. It provides a nice transition to the next post.

You’re completely right. We don’t reward saving, investments, or planning for the future nearly as much as we should. Heck, our very economy is based off debt (look how much in debt the US government is).

It worries we as well the amount of people who rely on the equity of a house going up so they can take money out to live. Unfortunately, this trend seems to be increasing.

America seriously needs a money wake up.

Adrienne :)

]]> By: Uncle http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-11 Uncle Mon, 30 Apr 2007 22:37:07 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-11 Sorry for getting ahead of you- What has always worried me is how people feel very comfortable using asset debt as a source of income towards investments- It's kind of a house of cards mentality that is engrained throughout the USA. I think a lot of it is how our economy is structured. We don't reward people for saving- In fact the tax laws almost penalized them in some respects. I think a lot of it goes back first settlers- Leaving Europe to come to the New World- People in American love to take risks, gamble and hope they will all be millionaires!! LOL! Anyway- Thanks for making me think! Sorry for getting ahead of you-

What has always worried me is how people feel very comfortable using asset debt as a source of income towards investments- It’s kind of a house of cards mentality that is engrained throughout the USA. I think a lot of it is how our economy is structured. We don’t reward people for saving- In fact the tax laws almost penalized them in some respects.

I think a lot of it goes back first settlers- Leaving Europe to come to the New World- People in American love to take risks, gamble and hope they will all be millionaires!! LOL!

Anyway- Thanks for making me think!

]]> By: Adrienne http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-10 Adrienne Sun, 29 Apr 2007 18:09:57 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-10 Uncle Market performance and inflation happen regardless of which way you go. You got a little ahead of me there. I will be touching on living within your means and saving next post. Thanks for the through analysis. Adrienne :) Uncle
Market performance and inflation happen regardless of which way you go.
You got a little ahead of me there. I will be touching on living within your means and saving next post.

Thanks for the through analysis.

Adrienne :)

]]> By: Uncle http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-9 Uncle Fri, 27 Apr 2007 15:44:59 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-9 You are right- there are two types of debt- Substantiated (homes, lines of credit, cars) and unsubstaniated debt (credit cards). Homes, cars, etc- are assets that have value- Depending on capital, cash flow, etc- those assets are sources of cash- During recessions, and (worse )inflationary times- those assets enable you to free up capital- it's especially helpful when people lose their jobs, or wives have children, (or when relatives come to live with you for a couple of years) etc- to have liquidity of those assets- It's neither good nor bad debt. All debt is probably bad when you look at it- but necessary depending on the situations and the kind of lifestyle you are trying to maintaining. Your business model is pretty good- with the exceptions of the variables of market performance and inflation- The $260K does not have the same value in 2037 as it does in 2007. There are market adjustments that can also effect that flow- That interest rate on a stock or mutual fund will vary quite a bit. The same is true with housing prices- but there is much less variance in real estate (as long as you dont live on a coast) than there is with the stock market. What makes the most sense is whatever house you buy, you need to buy it on a 15 year mortgage, and it fits within your cashflow- The two biggest mistakes that someone can do is buy an adjustable mortgage (with PMI) and buy in an area that is too affluent for their pocketbook. That is where they start to borrow to keep their lifestyle afloat- and the trouble begins- As usual- great post! U You are right- there are two types of debt- Substantiated (homes, lines of credit, cars) and unsubstaniated debt (credit cards).

Homes, cars, etc- are assets that have value- Depending on capital, cash flow, etc- those assets are sources of cash- During recessions, and (worse )inflationary times- those assets enable you to free up capital- it’s especially helpful when people lose their jobs, or wives have children, (or when relatives come to live with you for a couple of years) etc- to have liquidity of those assets- It’s neither good nor bad debt. All debt is probably bad when you look at it- but necessary depending on the situations and the kind of lifestyle you are trying to maintaining.

Your business model is pretty good- with the exceptions of the variables of market performance and inflation- The $260K does not have the same value in 2037 as it does in 2007. There are market adjustments that can also effect that flow- That interest rate on a stock or mutual fund will vary quite a bit. The same is true with housing prices- but there is much less variance in real estate (as long as you dont live on a coast) than there is with the stock market.

What makes the most sense is whatever house you buy, you need to buy it on a 15 year mortgage, and it fits within your cashflow- The two biggest mistakes that someone can do is buy an adjustable mortgage (with PMI) and buy in an area that is too affluent for their pocketbook. That is where they start to borrow to keep their lifestyle afloat- and the trouble begins-

As usual- great post!

U

]]> By: Advice on debt RE: student loans/house mortgage - Personal Development for Smart People Forums http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-money-2/#comment-8 Advice on debt RE: student loans/house mortgage - Personal Development for Smart People Forums Fri, 27 Apr 2007 02:42:21 +0000 http://www.adrienned.com/blog/2007/04/26/ask-adrienne-debt-%e2%80%93-money-2/#comment-8 [...] it and there is a lot of math in it for you, but it should explain the point i was trying to make. Adventurous Philosopher » Blog Archive » Ask Adrienne: Debt – Money 2 Adrienne __________________ Adrienne Adventurous Philosopher -- My [...] [...] it and there is a lot of math in it for you, but it should explain the point i was trying to make. Adventurous Philosopher » Blog Archive » Ask Adrienne: Debt – Money 2 Adrienne __________________ Adrienne Adventurous Philosopher — My [...]

]]>