Why Saving and Paying Down Debt Is Stupid

[superhawkn]

Debit is bad only 1 percent can use it effective. Debit sucks debit sucks debt cards are even worse.

[wjestick]

This idea was OK before the crash, now it is a dead idea. Banks are not lending to ordinary people at competitive rates. Even leverage in equities is useless because the big players induce volatility to stop out small traders.

Finally anyone in debt when the currency finally goes collapses will be owned by the bank. Even modest debts will be unaffordable in a newly devalued currency.

[cannotbebothered100]

How can big firms that manage to make price movements volatile to so effect returns from equities, prevent other investors from undercutting their buying to short sell?

[cannotbebothered100]

The reason there is not much low interest lending is because most productions over time wouldn't have such a rate of profit from exploiting low costs they could attain in effect by being granted credit, to make any loans but higher rates ones profitable, hence the desirable shift to producing 4 the present consumption that makes those rates high. That's why it's good when the rentier's signal drags govt spending-it's inexpedient given high consumption's squeeze on falling output.

[kessass83]

Not smart to invest into paper money or keep it as a saving that even stupid can grasp. But it would be more safe to invest into something that has a real value such as silver, and at the same time which is liquid during bad times, because real estate during bad times and high inflation will be hard to sell, so if your tenant will loose job, you will be downgraded from good debt to bad debt. This is my advise from less intelligent investor.

[BotRots]

If you're rich, is that because people owe you money? Ahhh now I see what you mean by good debt.

[Anavengertg]

It's debt not depth...

[LetsCook2gether]

Visit:

creditorsincommerce DOT com

You're not a debtor you're a creditor.

They mislead us and turn the tables

They are the debtors and we are the creditors

[simpleearthling]

so let me get this right if i buy a house using the banks money and the rental pays the mortgage and has a little bit left over then this is good debt ,,wow this guy is a fucking genius ,,,just one question what happens when house prices start to fall and interest rates go up to lets say 10% ,,and imagine if all the oil producing countries start to riot and oli goes up to $240 a barrel and everyone start loosing their jobs in the town where you bought all the houses ,,is that good debt

[CJPlayer3026]

They said real estate was a good debt, but look at how many people are loosing their ass on that good debt.  Good debt is debt "paid in full". SAVE YOUR MONEY AND PAY CASH FOR EVERY THING!!!!

[noclouds111]

We've come full circle on the idea of free market. Free market has as its' claim a constantly increasing value ref to as 'growth'. 1 percent growth in 2010 is exponential compared to 1 percent in 1970. Growth cannot be long sustained. It is no different than trying to establish a new record in the 100 meter dash.

Eventually, the record/growth will come to a standstill...even without printing money, bad legislators, & all of the other negatives we hear about these days.

[ncbookz]

he is speaking truth you can not save more than they print the value is going down fast for sure

[VagabondInvestor]

What does USSR got to do with real estate anyway?

[Deacon1Blues]

Do you really want to cum on your viewers faces, like you said at 0:46?

[Turkeysucks2010]

This county is going communist, what county is this guy from USSR? The US government now through fannie and freddie will be the backer of every loan and property transaction. Real Estate agents will soon be housing assignment officers, commerade. Stay away from all real estate!

[Bloodsport1]

the best advice is dont have any debt at all. No bills. Pay them with cash not credit card.

[UnitedCorpOfAmerica]

Sure, and the renter can never lose his/her job. LOL

[ncbookz]

@UnitedCorpOfAmerica get a new renter or rent it out as a boarding house! think outside the box friend

[trentable]

The problem is that all good debt also has inherit risk. Profits are dependent on factors that are not controllable by the investor. The best idea is not to put all your eggs in one basket. Secondly to ensure that you have the means to ride out a low.

[oldschoolriders]

There is no such thing as good debt.

He means get rich off the hard work of others.

Just another get rich scheme.

[tunnelportterror]

you dumb ass, the BEST thing you can do now, is pay off your debt in full- your advice sucks, because you are advising people to go bankrupt and default, you lowlife scum- you're not rich if your net worth is negative due to debt- you're living in a fantasy world, in a small snow globe- you're relying on RENTAL INCOME ? what if the renters lose their jobs and don't pay- then what- my grandmother lost 5 homes during the Great Depression because the renters lost their jobs and could not pay rent

[PrecisionTradingSys]

i wonder if you have considered the increases in interest rates? You talk about inflation, but you miss the correlation between interest rates rising with inflation. In the 1970s the interest rates went over 20% in USA. Do you still say not pay off mortgages under this threat which is inevitable? 

[themountainviewguy]

Kind of pointless advice ... don't pay down debt ?

Depends on who you are talking to and what their debt is ?

This is not necessarily good advice and it has nothing to do

with getting rich. If you have a process called getting rich,

whatever it might be, if it works you will get rich, if not you

won't, credit is just a tool to be used or misused along the

way. A slick fancy way of saying nothing here.

These guy's way of getting rich is to take money for this kind

of nothing advice I guess.

[bohemianh]

good debt, bad debt, these are more correctly called cash flow issues. Be aware that your reantal proerties may lose 40% of the market price, and thus your abiltity to rent to cover your borrowing costs will be vastly reduced. This is what many Florida investors are facing now. There credit is destroyed, cash gone and having to pay lawyers to get them short sales to unload these properties.

[VagabondInvestor]

@bohemianh That's a valid point. It's very obvious that many investors, especially in Florida, are in financial dire straits right now. I think that money and debt especially is like a loaded gun - you have to respect it at all times. All RE investors are not on a highway to hell despite the market. Those people that have the lucrative position to be able to buy will do well, if they know what they're doing. For those people, saving money is not the ultimate idea to get rich.

[smurfsex]

0:45 : I'm here to come a little bit on your face" AHAHAHAHA FOOL

[siszam]

You're a fool. It's as simple as that.

[crabtrap]

Did he just say he was going to "cum on your face"? @ :53

[Rico8458]

why pay into and buy into a corrupt broke system that has no money? first they took away gold from our money, then silver, and gave us fiat paper dollars that are worthless, debased, depreciated and devalued toilet tissue paper money. then, they borrow from communist china to pay the troops and pay for west point . a government that borrows from it enemies is worthless nation. we are doomed and so i say stop paying bills and file chapter 7

[Rico8458]

america needs to file bankruptcy becaue the u.s. treasury has no money at all. dead broke. this government is broke dudes.. so stop paying bills.

[VagabondInvestor]

I think it is just a matter of time when the US declares bankruptcy. As sad as that is, it seems inevitable. The closer we get to that moment, the more money will be printed. As more money is printed, massive inflation takes place. Under that scenario, saving becomes stupid indeed.

[awsomeshot]

@VagabondInvestor I think that is why there really is no good debt in the US anymore. there are very few 'safe' investments now. treasuries pfh nope lol. commodities ehhh with our government with its fingers in the farming industry not safe. Metals... I dunno I am afraid that U.S. declaring bankruptcy will just result in a cataclysmic downfall of society in our country and huge amounts of civil war and strife. Firearms and ammo are a safe investment for that reason lol.

[kessass83]

@awsomeshot Yes there will be civil wars, dead bodies, famines, but it will be the question of when, and at least who still thinks he knows that, but he knows too that he can't change anything about it.

[cannotbebothered100]

Well then don't save in dollars that they're printing, durr! If you save, you allow costs to fall as profit in producing product falls or goes to zero if saving is total and consumption is absent, and then you allow elongated production for the future rather than consistently having producers scrabble 2 offset high capital costs with constant finalisations of output for sale. That's why consumption disallows by high rates all but the most useful such elongations prior to output

[cannotbebothered100]

'Drags' by high rates don't drag such investments for future consumption if they are necessary for employment i.e. if there is no present consumption to bring profit to make present finalisation of output profitable/to make distraction of capital therefrom less profitable unless what it can attain by longer rather than immediately finalising production structure is so valuable that even with low savings the deference of returns will pay off (Not govt 'investments' then!)

[cannotbebothered100]

Th reason those high rates don't so drag investments is because if there is investment spending the rates fall and if not, and if there isn't consumption spending to allow production for the present to be profitable and continue, then direct capital costs fall to offset any costs rates would impose, making them redundant to float these productions profitably over time by judicious use of that time to exploit it better for when consumption does recommence to reap thrift's fruits

[ashatut]

These guys are a Part of the problem. Too many investment advisers and too few workers producing real goods of value in the western economies now.

[duhastmich1001]

While it is true that you can expand your wealth much quicker using leverage, this only works when times are good, and or your calculated risk is paying off; however, when things go wrong, even "good debt" can lead to disaster. I was a banker for years, and earned a masters in finance; however, after all of my experience over the years, I would much rather be conservative and rely on slow, steady, and safe returns. Debtors do well during times of inflation, but it's miserable in deflation.

[MrAlanKendall]

Homes go up with the law of supply and demand; when foreclosures increase home prices fall, when foreclosures run out home prices rise and when foreclosures diminish prices remain flat. In the US, I expect foreclosures to run out around 2015/2016, after 2015/2016 I estimate home prices will quadruple by 2020 and go up six times by 2027.

[VagabondInvestor]

@MrAlanKendall That's an interesting statistic. Where did you get that?

[MrAlanKendall]

Vagabond Investor, thanks for the good videos. Every 40 years, 1890, 1930, 1970 and 2010 we experiene a decade of recession. After rates have been lowered 2 decades (80's and 90's) you cannot keep lowering rates to stimulate the economy so the economy strugles when the next economic expansion peaks. The 2010's are like the inflationary stimulus plans of the 1970's, when Real Estate dried up in 1976, Real Estate quadrupled from 1970 to 1980. Real Estate WILL quadruple from 2016 to 2020.

[MrAlanKendall]

@VagabondInvestor

Kevin Chiu in a report on April 12, 2010 said that foreclosures will be a drag until 2015. Another report says that the US Government is spending over 4 billion more per day than they are taking in and sometime between 2013 and 2018 we will experience increased inflation when the Governement cannot pay the interest on the deficit and will have to print more money. Putting together the running out of foreclosures and the increased inflation and you get a huge jump in Prices.

[kessass83]

@MrAlanKendall Hopefully you wrong. And again we will have massive speculation, prices will increase 20% per year, people will consume again more, everybody will look very happy, everybody will live off from their credit cards, because their home equity will rise infinitely, everybody will think that they won't need to work. What I hope there will be massive austerity plans, tax increase which is inevitable, and reduction in household debt as well as in national debt which won't lead into HB

[MrAlanKendall]

@kessass83

When interest rates are close to zero like they are now, and another housing boom occurs the Government raises rates and historically businesses lay off so the recesion lasts a decade with more waves of layoffs. Retail, Airlines and Automanufactures have the most debt and are the most at risk when rates go up.

[MrAlanKendall]

@kessass83

When interest rates are close to zero like they are now, and another housing boom occurs the Government raises rates and historically businesses lay off so the recesion lasts a decade with more waves of layoffs. Retail, Airlines and Automanufactures have the most debt and are the most at risk when rates go up. This is why the recession that started in 1970 lasted till 1983, and the recession that started in 2007 will likely last till 2020.

[kessass83]

@MrAlanKendall Wait wait a minute. The 1970s had been caused by oil embargo, which caused massive increase in most products, and which caused massive inflation that lasted for some time, it wasn't caused by low interest rates. I would like to agree with you that we have the same situation, but as you know in order to fight with inflation at that time they increased interest rates a lot, and because of that most manufacturers bankrupted. But at that time at least the debt, and def. wasn't so

[MrAlanKendall]

@kessass83

Real Estate peaked in 1966, stocks in 1969 and the recession hit in 1970 and finished in 1983. The Oil embargo was in 1973-1974. Notice how there was NOT much inflation until foreclosed homes were sold off in 1975 (this was because the contraction in jobs and construction had inflation under control). In 1976 the infustion of cash by banks caused the inflation + later govt spending.

[burningred2121]

Good debt is great until there is no one with jobs to pay your debt off. Then it turns in to bad debt. This video means nothing anyway is was posted on July08. I sure this guy is singing a different tune right now.

[SGDeGalvez]

The guy is trying to convince ordinary people that 'Paying down debt and saving is stupid'. Take alook at the condition of this country and give me your best guess at how many people are capable of separating good debt from bad? Our own govt has no clue how to do that. 'Brain surgery on your children is a great way to save money!!!' True, if you are a skilled brain surgeon, but for most, it is ill advised. For the common man, keeping interest to a bare min is the best way to financial freedm

[Goldsovereignuk]

What a dumbass!

[SGDeGalvez]

Veagabond investor, you are an idiot. How many ordinary people can take indebt thier way to financial prosperity? you tubers, dont listen to this asshole shill, pay off your credit cards and your house. TEHRE IS NO BETTTER SAFER INVESTMENT THAN PAYING OFF YOUR HEVAY INTEREST BEARING LOANS!!

[DebtIsMoney]

Good debt needs to be paid back fast. That will become no debt and that's good. Bad debt is just not smart.

[newnoggin2]

What an idiot there is no such thing as bankers money. It's somebody else's money. As for savings, again an idiotic statement. If there was a high savings rate, the banks would not have to borrow from the FED, ergo, less inflation. This kind of idiot has us in the mess were in. He doesn't understand value versus money. Inflation acts as a tax. His kind of thinking has shifted the buying power away from th everyday people to the central bankers. What he teaches is immoral.

[akiraguy]

your advice is one of THE best advice a free man can have for free! five star for you.

[9r39]

is there a sure way to tell if its good debt or bad debt...what if in the middle of ur investment the property bubble burst and u LOSE money ?!!

[UcanbeGOD]

Debt is bad period. He makes points about investments being "good" and they can be beneficial but how many things are there like the example he made of renters? All you are doing then is depending on a renter to pay your bills. Risky?

[MarcusCMarcellus]

He's absolutely right. A consequence of artificially low interest rates in the US is to discourage savings. If rates do not keep up with inflation, and since the 1960's they have not, investors must put their money elsewhere. The Fer Reserve and securities dealers want it that way. Besides, the devalued currency makes repayment of US gov. debt cheaper. Fiat currency (which is really the most basic derivative instrument) is designed to devalue on command.

[faylow105]

I'm paying off my house as fast as I can! Why? If we lose our jobs then making house payments will be impossible. If we continue working, then I can do wealth building that much faster with no payments over our heads. If I pay the house off early, the interest I'm not paying will be a heck of alot more than what I can earn in investments right now. And not paying that interest to the bank will be a sure gain for me, not a risk!

[brizzlie]

Leverage. Fine, I get that. But understand that it multiplies your risk too. It's irresponsible not to mention this.

[romeoneverdies]

dept is always bad

the best investment you make is when you buy somthing that does not loose value over time & do so without encuring dept . it is true that dept can be manipulated to your advantage but cases where there is no devaluation are rare .

afterall house pricing may go up but can also go down rapidly due to inerent risk in the house itself (it can go up in flames for example)

but the land it sits on is the real value !

(land is verry precious!)

[nokilt1]

land is precious but heavily taxed

best investment now is food ,guns, and gold or silver

[surgednb]

these guys actually have it right.

[rhyinem]

Rated 5 for "im here to come a little bit on your face" -- 44s

[smasila]

If this guy is rich, then why is he doing a video in a public park?

[cannotbebothered100]

@smasila

He doesn't have to show off to be successful does he? Or is that the American way, like veterans who pin their medals on their civilian work office doors, how crass!

[stinky125]

Gwad forbid peeps stop investing in you and save their loot......you'd be selling apples.

[VagabondInvestor]

There is insurance for stocks and there's insurance for real estate. Real estate provides the easiest example on good debt. While this is not a video about asset allocation, you're right, you have to have other asset classes as well and you have to keep your debt/equity ratios under control. Too many people don't respect the fundamentals and they experience what you said - their debt turns sour and they lose it. Personally I think it's better to know your game better.

[tomniemiller]

A renter stops paying you and won't leave the house. Too many other people rent out houses in your area. Now your house is "BAD DEBT". Your methods do not account for risk.

[VagabondInvestor]

An interesting point of view. How long have you been investing professionaly in properies? The way I see it is that the risk you issued is manageable. It's like saying "You own a stock and now it goes down in value. You lose money." While it's true, it doesn't always happen and you can hedge against that. You can hedge risk in real estate as well as with stocks. You have to be a better investor than buy houses that all turn out to be lemons. That just never happens if you're good at what you do.

[tomniemiller]

I'm not a real estate investor. Just a student of Mises and Dave Ramesy. You can be good at buying houses that are the best in the market, but if the market fails - you did well and still lost money. To further your stock analogy, buying houses with debt reminds me of buying stocks on margin. But I cannot figure out how you are hedging real estate risk unless you are referring to diversifying your house purchases.

[ratecut]

I wish I'd known this a couple of years ago. Shit balls.

[rikestard]

great advice, 1 ? for ya, how do i get the house loan?

[fvaz72]

This guy is right in all he says except that he should be mentioning that what he teaches are his teachings but of Robert Kiyosaki

[VagabondInvestor]

Fair enough. Mr. Kiyosaki, who I greatly respect, probably discovered that by studying economics and economic history. But this information is available to anyone. The fact that I'm repeating it here doesn't change the facts about inflation. Nor do I think it makes the facts his teachings but rather general knowledge that all people should have access to.

[imalittlebitcountry]

Hey Jaakko, lots of my rich friends are investing in gold + silver, isn't that the best hedge against the dollar at this time?

[Sepero1]

This is true advice. Unfortunately, most people would fail with this advice for two reasons. Either they don't know the difference between assets and liabilities or, they are simply unable to control their desire for liabilities.

[VagabondInvestor]

Sepero1, that's true. You can't take one piece of financial education and expect to do well with just that. You have to know more. In fact, in my opinion, knowing the difference between an asset and a liability is the most important thing. I want everybody watching this video to get the point that Sepero1 made. He's 100% right.

[tobasco77]

How to make money: Find (stupid) people who have money and get them to "Invest" in your crackpot ideas. You can easily do this by Dressing Nice and Talking Slick and Fast with CONFIDENCE like you know what your talking about and most STUPID RICH PEOPLE will believe everything you say. Americans LOVE the idea of "Investing" their money to make money... It's mostly a CON because most investments LOOSE more than they make.

[VagabondInvestor]

Despite the quite bitter sarcasm of your comment, I agree on your point. Most so called "experts" on the investment arena are salespeople. I hate to say this, but I had the opportunity to see the inside game of that for too many years. The good thing is that investing doesn't have to be so damn hard. An average fellow (like me) can learn it if they want to. It may take more than a visit to an "experts" office to do that, though.

[savolma]

These guys are taking the subject quite seriously. They have pretty disturbing thoughts and ideas. Also the blog is entertaining and useful.

[Tygryss84]

Look ! - Kiyosaki gotten younger :P way the go Robert

[proofset666]

What's kind of funny here is that the only reason you're able to have 'good debt' is that somebody is saving money, which VagabondInvestor is telling you not to do!

[VagabondInvestor]

Leverage is power!

[yallmussbekidding]

I'm naive on this stuff, so correct me if I'm wrong. But isn't leverage exactly what's brought our economy to its knees? I mean, there are REAL assets, and then there's all the paper that's leveraged against those real assets. Problem now is that the assets were overvalued, and eventually lost value. So all that leverage built on top of the overvalued assets came crashing down. Please correct me if I'm wrong.

[ilkkalavas]

well, this is all about gearing