Why Saving and Paying Down Debt Is Stupid

So You Want To Be Rich?
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[VagabondInvestor]

What does USSR got to do with real estate anyway?

[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.

[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.

[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?

[nokilt1]

land is precious but heavily taxed

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

[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!

[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.

[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]

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

[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]

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

[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.

[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.

[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