Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Debt is not slavery and only an idiot truly believes that. Debt is a promise to return something in the future and pay someone for having let you borrow it. Slavery is a lot more.
I have a mortgage. I'm not a slave anymore than you're a slave because you have to eat food every month. My debt is a monthly expense, nothing more, nothing less.
People who pull out that slavery comment need to get grounded back in reality and stop basing life off one line sound bites.
fbumpass' comment, I would guess, was a figure of speech. I make that comment as well... but I don't literally mean the person with debt is a slave.
I guess the slave comment can apply, if you go deep and attempt to make the argument that you are literally working for someone else... then, instead of slave, maybe you would approve of the comment "Dept is like sharecropping" (which has its own "slavery" connections).
To some, debt is a lot more than a monthly expense.
fbumpass' comment, I would guess, was a figure of speech. I make that comment as well... but I don't literally mean the person with debt is a slave.
I guess the slave comment can apply, if you go deep and attempt to make the argument that you are literally working for someone else... then, instead of slave, maybe you would approve of the comment "Dept is like sharecropping" (which has its own "slavery" connections).
To some, debt is a lot more than a monthly expense.
Yup, I think it as a tool. One that can be very useful or overused depending on the application
fbumpass' comment, I would guess, was a figure of speech. I make that comment as well... but I don't literally mean the person with debt is a slave.
I guess the slave comment can apply, if you go deep and attempt to make the argument that you are literally working for someone else... then, instead of slave, maybe you would approve of the comment "Dept is like sharecropping" (which has its own "slavery" connections).
To some, debt is a lot more than a monthly expense.
Some debt is a lot more slave-like than other debt. The most slave-like debt is huge private student loans in default where the principal has ballooned to something crazy like $250,000 for a BA in music and the borrower will be working his/her whole life not even able to pay the interest, let alone make any headway on the principal balance. Of course the borrower can leave the country and escape, and certainly this is still nowhere near as horrific as actual slavery, and creditors cannot beat you with a whip no matter how much you owe. But sometimes a bit of hyperbole is useful for getting at the type of problem you're dealing with.
But how likely is that sort of sustained market downturn? Assuming the money is in tax-advantaged retirement accounts, it will be expected to grow by 8% a year above inflation (10.5% for 2.5% inflation, 11% for 3% inflation, or 12% for 4% inflation).
In which case the type of sustained income hit you envision is quite unlikely on meaning (a), unless you retire at the peak of a market bubble (which should be avoided of course).
But that is just it, the stock market is not expected to grow at 8% per year above inflation. Again, long-term CAGR of the US markets is a bit below 9%. This is before inflation, and before investing costs.
I don't think Ramsey promotes 100% large-cap stocks or S&P 500. Of course if you assume S&P 500 then I'd agree 8% is too high. But throw some small and mid cap and international stocks in there...
Throw them in and....what? William Bengen's research concluded that adding small caps to a portfolio increases safe withdrawal rate to 4.5%. International stocks do not increase expected return. Their value lies in diversification (less than perfect correlation).
William Bengen's research was published in the 1990s in The Journal of Financial Planning, in four different articles.
What research have you read which leads you to conclude adding small, mid, and international makes 8% a sustainable withdrawal rate?
He actually did this? Then IMHO he's not just another media finance personality, he's an a$$hat. I'm not a huge of The Motley Fool, but saying "I've helped more people than anyone, therefore ignore math" is effing stupid and rude. Also, forgetting about the math, even saying his opinion should carry more weight is stupid because it's like saying "McDonald's has sold more meals than any other restaurant, therefore their food is the best of ever". Now, there may be some important things to learn from the way McDonald's does things, but it's an obviously ridiculous statement. Dave Ramsey doesn't seem to take disagreements or criticisms well, and that speaks volumes of him as a person.
Debt is not slavery and only an idiot truly believes that. Debt is a promise to return something in the future and pay someone for having let you borrow it. Slavery is a lot more.
I have a mortgage. I'm not a slave anymore than you're a slave because you have to eat food every month. My debt is a monthly expense, nothing more, nothing less.
People who pull out that slavery comment need to get grounded back in reality and stop basing life off one line sound bites.
Well, it's not literal slavery, agreed. I have been in consumer debt hell, and I did often feel that my freedom was greatly constricted.
I think the proper way to word the statement is, "Living in a life of constant debt, is slavery." If you are so buried under debt, that you must use debt to fund any sudden expenses or recreation...then that is slavery. You have many masters who all demand a piece of your paycheck, and with good reason. A lot of people never build up a nest egg before they buy those fancy cars, big house, or have kids. Therefore they get deeper and deeper in debt because of lifes little surprises that get thrown at us. If more people would spend their 20's building wealth rather than "living life" and "enjoying the best days of my life" then I feel that most Americans would be far better off. However everyone I talk to in this age bracket rebuttals "Whatever Id rather enjoy my youth than have more money for when Im too old to enjoy it." Sad really. Then down the road they'll be broke and want me to pay their healthcare costs and unemployment.
I think the proper way to word the statement is, "Living in a life of constant debt, is slavery." If you are so buried under debt, that you must use debt to fund any sudden expenses or recreation...then that is slavery. You have many masters who all demand a piece of your paycheck, and with good reason. A lot of people never build up a nest egg before they buy those fancy cars, big house, or have kids. Therefore they get deeper and deeper in debt because of lifes little surprises that get thrown at us. If more people would spend their 20's building wealth rather than "living life" and "enjoying the best days of my life" then I feel that most Americans would be far better off. However everyone I talk to in this age bracket rebuttals "Whatever Id rather enjoy my youth than have more money for when Im too old to enjoy it." Sad really. Then down the road they'll be broke and want me to pay their healthcare costs and unemployment.
It's not debt that's a problem at all. Technically it's negative equity or net worth. Simply put, when you owe more than you own, you have a problem. Debt is just half of the equation and by itself, can be a very useful tool. Even credit card debt has a time an place. If I'll be getting my bonus in 2 month and need to fix my car today, paying one month of interest is still justifiable if I'm going to lose my job before my bonus without a working car.
My opposition is to people who draw the hard and fast line of Debt = Bad. Owing $1000 at 0% and having $1000 in the bank is exactly the same as not having any cash or debt. You only have a problem when you owe $1000 and have $500 in the bank.
Last edited by Jeo123; 08-18-2014 at 08:53 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
