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Super Contributor
How many formites have savings equal to or greater than their current depts.
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46 REPLIES 46
Super Contributor
Hmmm - why have savings if you have debt? Better to pay off the debt, surely?
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Super Contributor
point taken..however if we follow that thinking nobody on the forum (investing/saving on the stock market) should have any dept at all.
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Not applicable
well if your debt is greater than your savings you shouldn't really be investing/trading, because you are effectively losing money constantly, just my thoughts
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Super Contributor
I have saving/investments greater than current debt (car loan, etc). many people would have investments and debt, that is just the way the world works, e.g. mortgage loan, but also an investment account, credit cards and investment, i think its normal, if one can get better return on ones investments it makes sense to have a car loan or mortgage on your house.
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Super Contributor
Ok. I have debt - but only a little, and only because the interest rate on that debt equals the interest rate I receive on the money-market, and paying some form of debt gives me a favorable credit rating for any future debt I might need to incur.
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Super Contributor
The answer is to have a minimal debt..I have a friend of mine that always tries to beat me in the car that he drives. His car always has to be better. I had to bail him out recently otherwise his car was going to be repossessed.He is a good salesman but he doesn't have the foggiest clue how to work with money.
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Super Contributor
Wizard, 100%, i posted the 10 guidelines to investing from Richard Bernstein, his #10 is that leverage has the illution of wealth, but saving is wealth. so if one uses leverage too much its dangerous but small level, e.g. reasonable car, use credit card for convienience and not as a result of needing more money, etc. that can work well for people... but dont spend what one doesnt have, it can come back and haunt you... or that is what i think.
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Super Contributor
I have 0 debt. Its really the way to go. So many of my mates are going happy days are here again now that the interest rates are dropping. What also worries me is that due to the recent rally in the markets people are starting to believe that good times are here again and taking on more debt. How do you convince people to reduce debt rather than take on more! Or is that simply not our problem :)
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Super Contributor
Nothing wrong with a geared balance sheet. As long as your return on assets > cost of funding.
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Frequent Contributor
I think wealth should be measured in time... it is the number of days that you can sit at home with all your expenses getting paid through a combination of passive income/saved capital. Most people can't survive a single month if they should lose their job.
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Super Contributor
well, in this economy, I hope they have retrenchment insurance.
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Super Contributor
I always thought the more money you owe when you die, the better the profit you made out of your life because you were born with nothing.
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Super Contributor
lol thats quite funny..sad..but funny
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Super Contributor
You can't convince them not to take on more debt as its their live. They are just plain simple greedy. We live on the opposite site... making money and we should not be greedy as to make money HERE. You know what I mean...
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Super Contributor
I agree with the comments made by Werner, doomsdayza and SkarkelenKoos but would like to add that what ever the situation you must make sure that your that you are being tax efficient. (i.e. there is no advantage in paying too much off on a bond for property you are renting as you can claim these as expenses and then no tax on rental income). But then also at the same time make sure that your balance sheet assets are larger than your liabilities. This is something that I have regretted that I did not do over the years, which is the lack of my attention of preserving my own balance sheet and becoming more tax efficient. It does not take much time to do this. OMO.
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Super Contributor
I have no debt.I only started my investment company when all my debt was cleared.It takes the emotion out of the game-it's 19 years since I cleared my debt and I stopped working for other people 13 years ago.Since clearing my debt life has been pretty easy-before that it was a daily grind.
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Not applicable
I have to agree with the zero debt approach. If you want to get technical the credit card is debt, but it is paid in full every month. Stopped working for others 5 years ago and have never been happier. Have mortgages on properties but they are all paid up, so if I need emergency funds it is available immediately. Hate begging a bank manager for funds for short term investments. All they want to do is sell you more debt (personal loan or overdraft). All extra cash is plowed into investments or property.
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Super Contributor
I also borrow from property bond when I need a bail out its a cheap way to borrow for short times always put money back to make bond equal zero when the profit comes me and stop loss have still got issues
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Not applicable
3 months ago i had no debt but alas a really nice house at a price i couldnt ignore came on the market so now i have 1 house bond free and 1 house bonded. but hopefully the market turns over the next 2 years so I can sell my old house and be debt free again.
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