Savings vs Debt (Page 2)

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2007-05-15 5:28 PM
in reply to: #801820

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Expert
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Wind Lake WI
Subject: RE: Savings vs Debt
julio26pt2 - 2007-05-15 4:19 PM
tkbslc - 2007-05-15 9:26 AM

Would one be better off having no debt and no savings or say 10,000 in debt and 10,000 in savings? Both positions give you a net worth of zero, but it seems like you have more options with the 10,000 in cash. Basically I am asking if you had the cash to pay off debt is it always smart to do so?

 

 

Okay, let me ask you this question. Would you take out a loan to put the cash in savings? If you would, then keep the debt and savings. If you wouldn't, put the money towards the debt.

I often carry >50K in credit card debt. It's all at 0% and invested in risk free CD's. If you know how to play the game right, you can make a few K a year with little effort- if you know what you are doing and can manage to play by the rules and manage your credit score.

However, 50K in CC debt spent on toys would be a bad thing. 

 

2007-05-15 6:59 PM
in reply to: #801206

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Subject: RE: Savings vs Debt

alltom1 - 2007-05-16 4:00 AM This really wouldn't apply to consumer debt, but leverage has created alot of wealth in this country.

I couldn't agree more. Being able to leverage existig assets is the cornerstone of wealth creation.

2007-05-16 1:02 PM
in reply to: #800955

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Champion
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Subject: RE: Savings vs Debt
Well the problem keeping debt and investments is if your investment crashes and you lose your money your in trouble. I seen people burnt by the stock market by doing this same thing.

There is something to say about cash though. You can not get money back you paid in extra to with your student loans if you need it. Debt can be useful but if your not careful your going to get burnt.


If you have a credit card debt with high interest then do not even think about investments except maybe lotto and tri gear until this gets paid off.
2007-05-16 1:07 PM
in reply to: #801916

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Edited by Rynamite 2007-05-16 1:08 PM
2007-05-16 2:10 PM
in reply to: #803026

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Subject: RE: Savings vs Debt

chirunner134 - 2007-05-16 1:02 PM Well the problem keeping debt and investments is if your investment crashes and you lose your money your in trouble. I seen people burnt by the stock market by doing this same thing. There is something to say about cash though. You can not get money back you paid in extra to with your student loans if you need it. Debt can be useful but if your not careful your going to get burnt. If you have a credit card debt with high interest then do not even think about investments except maybe lotto and tri gear until this gets paid off.

Very few people who are adequately diversified in mutual funds/stocks/bonds/ and real estate get burned over the long run.  While the Great DepressionII might be right around the corner I doubt it. I'm not talking about day trading, but long term moderate risk investments pay off.  The reason you make money on the stock market etc is because you assume risk.  The payment is for you assuming some of the risk of an endeavor.

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