That was kind of what my parents did, they avoided taking loans at all costs. This is what helped keep us afloat after the Greek debt crisis. I remember my dad was talking with some parent of some friend of mine who was in a really bad situation, about to lose his house etc. At some point he asked my dad how things were going for us, and if he had any loans to repay, and my dad told him no, so aforementioned parent told him "then you are rich. If you don't have debt to repay in our times, you are rich".
What I've learned from what happened (not just me, most young people here) is that if you are just trying to live decently and aren't some kind of yuppie, the best financial advice is never, ever take loans if you can help it. They are evil, and when the economy inevitably takes a shit, you will be in a desperate position.
I aim to do the same, except for my student loans but they’re government (Australia) and pretty reasonable. I hope to keep a pretty good safety buffer in my bank so I wouldn’t have to take out a loan if a big cost comes along.
In Aus the interest on student loans is pined to the Consumer Price Index and you don’t have to start paying it off until you’re making over $46000 AUD. Once upon a time it was free but could be a lot worse. 👀
High school economy classes are taught that inflation means it's always good to pay today's debts with tomorrow's devalued money so loans are cool and good. In an economic crisis this is doubly true because rapid inflation essentially wipes out all debt. Did my teacher and economics books lie to me?
Long term debt like mortgages are generally tied to the central bank cash rate, which is in turn tied to inflation. Theoreticaly, if theres massive inflation then your interest rates go up and wipe out any advantage you might have had.
For short term fixed rate debt, it could possibly be true. If you got a 1 year long car loan fixed at 8% and inflation jumps from 3% to 10% then you've essentially saved money. This is, of course, assuming that your pay also rose 10% to match inflation, which in this day and age...
One of my old supervisors and his wife are both gambling addicts. He'll walk into a casino with 1-2k in cash and blow it in an hour and then take cash advances out from his credit card and keep gambling. Got himself 60k in the hole in credit card debt. His father in law died and left them like $240k and they paid off all their debt. 6 months later he was $60k in credit card debt again.
why would you take out a loan to bet
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That was kind of what my parents did, they avoided taking loans at all costs. This is what helped keep us afloat after the Greek debt crisis. I remember my dad was talking with some parent of some friend of mine who was in a really bad situation, about to lose his house etc. At some point he asked my dad how things were going for us, and if he had any loans to repay, and my dad told him no, so aforementioned parent told him "then you are rich. If you don't have debt to repay in our times, you are rich".
What I've learned from what happened (not just me, most young people here) is that if you are just trying to live decently and aren't some kind of yuppie, the best financial advice is never, ever take loans if you can help it. They are evil, and when the economy inevitably takes a shit, you will be in a desperate position.
I aim to do the same, except for my student loans but they’re government (Australia) and pretty reasonable. I hope to keep a pretty good safety buffer in my bank so I wouldn’t have to take out a loan if a big cost comes along.
Yes, student loans are an exception, they are very important and also some governments help you with those.
In Aus the interest on student loans is pined to the Consumer Price Index and you don’t have to start paying it off until you’re making over $46000 AUD. Once upon a time it was free but could be a lot worse. 👀
Paying for university is a fuck.
High school economy classes are taught that inflation means it's always good to pay today's debts with tomorrow's devalued money so loans are cool and good. In an economic crisis this is doubly true because rapid inflation essentially wipes out all debt. Did my teacher and economics books lie to me?
this is why the fed's monetary policy is entirely focused on keeping inflation down, to protect creditors
Idk, I'm just saying lots of people lost their homes and I'm nooot fucking falling for it lol
Depends on what the terms of the debt are.
Long term debt like mortgages are generally tied to the central bank cash rate, which is in turn tied to inflation. Theoreticaly, if theres massive inflation then your interest rates go up and wipe out any advantage you might have had.
For short term fixed rate debt, it could possibly be true. If you got a 1 year long car loan fixed at 8% and inflation jumps from 3% to 10% then you've essentially saved money. This is, of course, assuming that your pay also rose 10% to match inflation, which in this day and age...
One of my old supervisors and his wife are both gambling addicts. He'll walk into a casino with 1-2k in cash and blow it in an hour and then take cash advances out from his credit card and keep gambling. Got himself 60k in the hole in credit card debt. His father in law died and left them like $240k and they paid off all their debt. 6 months later he was $60k in credit card debt again.