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It's funny that a black 0 in your bank account can make you better off than so many others, these days.



Debt is a dangerous thing. I don't think the same about governments. But I consider debt to be disastrous for individuals.

The reason is simple a lot of your work, time and energy drains into paying the most scary thing invented by finance industry so far - 'Compound Interest'. This is especially dangerous in the case of credit card. The debt keeps mounting because of two reason, you being unable to pay and yet still continuing to borrow money. This sort of a spending patters brings a lot of pain to people every where.

And all of this for what? Upgrading from iPhone 4 to iPhone 4s. Is this really worth?

In this sort of set up people living with a savings driven life get a automatic lead ahead of spendings driven people.

Because while you are working to pay off the interest money. He works for the same time and saves that interest money.

I think it will be safe to say to say that if your paying X% money as interest to bank by working for hours Y(Remember you are loosing X% money, thereby in effect rendering your Y hours of work useless, as though it never happenned). The same X% is the money earned by the savings driven guy in the same Y hours(Additional to the money he is already earning. So this his extra income).

You work to loose money and he works to get rich. Although both work for the same time. One gets richer other gets poorer. This is how bad debt can inflict suffering on you.

These days you can be relatively rich by just saving money! And avoiding debt.


I think the lack of understand about borrowing to fund an asset, versus borrowing to fund lifestyle. If it is going to return higher than the interest rate you are borrowing at, then cool. If, in the case of a house, it is cheaper than renting (without a high risk of capital value falling putting you into liquidity diffulties), then also cool.

Borrowing for consumption is where people make the mistake.


Don't forget however that you still have to have a roof over your head. Assuming you have close to $0 net worth when you graduate, you still have to lose money, be it over a mortgage or over renting.

So, the question is, which is cheaper? Your mortgage, or your landlord?




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