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(Bloomberg)   Interest rates are so low, investors are actually losing money by just parking their cash. Bonus: Losses tied to consumers paying off their debt and not paying interest   (bloomberg.com) divider line 99
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3484 clicks; posted to Business » on 30 Jul 2012 at 3:35 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-07-30 12:19:43 PM
I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.
 
2012-07-30 03:46:50 PM
In fact, right now if you look at the returns on US Treasuries as compared to the rate of inflation, you realize that people are actually paying US to let us borrow money from them.

(which if you understand economics, means this is an INSANE time to be cutting government spending. We should be borrowing like Banshees for long term infrastructure projects and to create jobs because we'll never be able to get the money for them this cheaply ever again.)
 
2012-07-30 03:50:29 PM

brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.


Well, there's always gold.
 
2012-07-30 04:02:28 PM

Famous Thamas: brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.

Well, there's always gold.


Nah. The ads on the talk radio station have moved on to silver.
 
2012-07-30 04:05:20 PM

brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.


Why is this a bad thing? Isn't it a bad thing when too much capital is kept safe rather than being spent or devoted to productive investments? Some would say that safe conservative investments are not productive, that they inherently tend toward rent extraction.
 
2012-07-30 04:06:13 PM

Famous Thamas: brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.

Well, there's always gold.


I prefer unobtainium.
 
2012-07-30 04:10:07 PM
Paid off all of my debts about two years ago, except for a car payment. Got another year or so to go on that. Being debt free is magical, and the banks can go F themselves. I'll never pay interest again if I can help it. I know that's not possible if I intend to buy a house, but that's a choice I guess I'll make later on in life. For now, I'm a happy renter.
 
2012-07-30 04:26:28 PM

Magorn: which if you understand economics, means this is an INSANE time to be cutting government spending.


Not when you consider that we 'never' pay off this debt and only roll them over. When interest rates normalize and this debt is rolled over into new debt, the shiat will hit the fan.

Think of it more as a temporary 0% credit card that you have no ability to repay and which resets in a few years. A couple years of easy livin' and then you will have hell to pay.

The CBO/GAO has an estimate called the Alternative Baseline that goes over this and is very troubling.
 
2012-07-30 04:28:29 PM

brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.


You need some TIPS?
 
2012-07-30 04:36:16 PM

dchurch0: Paid off all of my debts about two years ago, except for a car payment. Got another year or so to go on that. Being debt free is magical, and the banks can go F themselves. I'll never pay interest again if I can help it. I know that's not possible if I intend to buy a house, but that's a choice I guess I'll make later on in life. For now, I'm a happy renter.


Just finished paying off my student loans about a week ago. No debt except for the mortgage. It feels great
 
2012-07-30 04:38:35 PM

Arkanaut: brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.

You need some TIPS?


Ohhhh, you can't bring up TIPS here. Some FARK Economist will spout on for 3 pages about how CPI isn't really the correct measure of inflation because gas and cigarettes went up by even MOAR!
 
2012-07-30 05:05:26 PM

HeadLever: dchurch0: Paid off all of my debts about two years ago, except for a car payment. Got another year or so to go on that. Being debt free is magical, and the banks can go F themselves. I'll never pay interest again if I can help it. I know that's not possible if I intend to buy a house, but that's a choice I guess I'll make later on in life. For now, I'm a happy renter.

Just finished paying off my student loans about a week ago. No debt except for the mortgage. It feels great


I don't know about you, but I went debt free about 5 years ago and I suddenly have more money then I know what to do with. This year I took my nephews to Disney just because I could.
 
2012-07-30 05:10:19 PM

Slaves2Darkness: HeadLever: dchurch0: Paid off all of my debts about two years ago, except for a car payment. Got another year or so to go on that. Being debt free is magical, and the banks can go F themselves. I'll never pay interest again if I can help it. I know that's not possible if I intend to buy a house, but that's a choice I guess I'll make later on in life. For now, I'm a happy renter.

Just finished paying off my student loans about a week ago. No debt except for the mortgage. It feels great

I don't know about you, but I went debt free about 5 years ago and I suddenly have more money then I know what to do with. This year I took my nephews to Disney just because I could.


I paid off my student loans 2 years ago and it is nice seeing my savings account grow fatter with every paycheck.

/Only debt is my 15-year fixed-rate mortgage @ 2.98%
 
2012-07-30 05:14:36 PM

HeadLever: Magorn: which if you understand economics, means this is an INSANE time to be cutting government spending.

Not when you consider that we 'never' pay off this debt and only roll them over. When interest rates normalize and this debt is rolled over into new debt, the shiat will hit the fan.

Think of it more as a temporary 0% credit card that you have no ability to repay and which resets in a few years. A couple years of easy livin' and then you will have hell to pay.

The CBO/GAO has an estimate called the Alternative Baseline that goes over this and is very troubling.


Exactly. Borrowing now to refinance existing debt or to fund capital projects is fine, but borrowing unlimited amounts of 5 year paper to fund current operating deficits is great until you have to refinance it in 5 years at whatever rates are then.
 
2012-07-30 05:18:27 PM
I see this is the thread where we smugly brag about being debt free instead of commenting on the actual topic of the article.

Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.
 
2012-07-30 05:21:41 PM

Slaves2Darkness: I don't know about you, but I went debt free about 5 years ago and I suddenly have more money then I know what to do with.


I am always open to donations :)

Yeah, in all seriousness it is nice to know that the money you spend acutally goes for goods and not just paying some bank somewhere interest. If you really want to stick it to the banks, stay out of debt.

/You are an awesome Aunt/Uncle
 
2012-07-30 05:22:03 PM
I paid for my truck-boat-truck with cash and my mortgage is actually -0.3% which means the bank pays me every month to not pay my mortgage. Suck it.
 
2012-07-30 05:24:58 PM
Debt is dumb, cash is king, and the payed off home mortgage has taken the place of the BMW as the new status symbol of choice.
 
2012-07-30 05:25:08 PM

Magorn: which if you understand economics, means this is an INSANE time to

not be cutting government spending.

FTFY

If you understood economics, you would realize that the ONLY cure for a bubble is for it to pop. Adding massive debt to a problem caused by massive debt can't fix the problem, because your prosperity is a debt-fueled illusion and that no matter how good your economy looks, you will never be in a position to pay the debt back without bringing down the whole house of cards. 1946 saw one of the best year-over-year increases in Americans' standard of living. The cause was the end of WW2 and the termination of millions, if not tens of millions, of defense-related jobs.
 
2012-07-30 05:28:42 PM

thompsonius: I see this is the thread where we smugly brag about being debt free instead of commenting on the actual topic of the article.

Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.


That's why the stock market exists - lots of (relatively) safe long-term options there.
 
2012-07-30 05:29:52 PM

thompsonius: I see this is the thread where we smugly brag about being debt free instead of commenting on the actual topic of the article.

Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.


I doubt that any of the debt-free farkers are stuffing cash into mattresses. Other than a car payment and 10% of my limit on credit cards (zero balances are not as good for your credit rating), I'm also debt free, but, unlike dchurch0, I don't have a mortgage because mine is paid off.
 
2012-07-30 05:29:59 PM

thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment.


Not near as negitive as shelling out payments to the credit card companies/banks where 1/2 the payment is interest.

You wnat a negative ROI? Hard to beat that one.
 
2012-07-30 05:35:11 PM
I for one would like to thank BoA for that stunning 0.35% interest rate I'm earning on my money market this month.

/it's not just them, all money markets blow right now
 
2012-07-30 05:40:26 PM

HeadLever: thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment.

Not near as negitive as shelling out payments to the credit card companies/banks where 1/2 the payment is interest.

You wnat a negative ROI? Hard to beat that one.


For negative ROI, it is pretty damn hard to beat borrowing $25000 at 30 points of vig from Vinny down in red hook so you can roll that loan into scratch tickets.

END COMMUNICATION
 
2012-07-30 05:49:35 PM

WhiskeySticks: Debt is dumb, cash is king, and the payed off home mortgage has taken the place of the BMW as the new status symbol of choice.


Cue Gerry Raferty's Baker Street
 
2012-07-30 05:49:50 PM

Slaves2Darkness: HeadLever: dchurch0: Paid off all of my debts about two years ago, except for a car payment. Got another year or so to go on that. Being debt free is magical, and the banks can go F themselves. I'll never pay interest again if I can help it. I know that's not possible if I intend to buy a house, but that's a choice I guess I'll make later on in life. For now, I'm a happy renter.

Just finished paying off my student loans about a week ago. No debt except for the mortgage. It feels great

I don't know about you, but I went debt free about 5 years ago and I suddenly have more money then I know what to do with. This year I took my nephews to Disney just because I could.


You're doing it right.
 
2012-07-30 06:06:57 PM

dchurch0: Paid off all of my debts about two years ago


I paid off my last credit card this month. I can't believe how much better life is only having to worry about rent, utilities and groceries. I was like "Thank God, no more being a slave to creditors".

thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.


Hmmm...you sound like someone either suffering from crippling debt or someone who works in the financial field that's upset that people won't fork over all their money to you. I'd rather have cash in the bank to buy things with than to purchase stuff on credit and get cornholed with the interest.
 
2012-07-30 06:08:34 PM

dustman81: WhiskeySticks: Debt is dumb, cash is king, and the payed off home mortgage has taken the place of the BMW as the new status symbol of choice.

Cue Gerry Raferty's Baker Street


It is handy when you don't have any mortgages to pay off. The only payment I have is property tax and maintenance/utilities and I am sorted.

Of course cash is not always king when the money market crashes and that cash it worth dirt. If only we didn't avoid infrastructure upgrades for 60 years we would probably be in a good situation.
 
2012-07-30 06:14:45 PM

WhiskeySticks: Debt is dumb, cash is king, and the payed off home mortgage has taken the place of the BMW as the new status symbol of choice.


Dave Ramsey, is that you?
 
2012-07-30 06:16:08 PM
With interest rates being so low, I decided to pull some money out of my house on a refinance, installing a fairly large solar array and battery system.

With a 15-yr 3.15% refi, along with all the current incentives available from the Feds and State, the PV array pays off in 6.5 years - with the monthly savings more than covering the 1st month amount of interest paid to the bank.

/Money (and energy) for nothing
//and my checks for free
 
2012-07-30 06:19:21 PM

PacManDreaming: dchurch0: Paid off all of my debts about two years ago

I paid off my last credit card this month. I can't believe how much better life is only having to worry about rent, utilities and groceries. I was like "Thank God, no more being a slave to creditors".

thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.

Hmmm...you sound like someone either suffering from crippling debt or someone who works in the financial field that's upset that people won't fork over all their money to you. I'd rather have cash in the bank to buy things with than to purchase stuff on credit and get cornholed with the interest.


The borrower is slave to the lender. More and more people are realizing that and are telling the banks to get bent.

I like having money in this thing called an "emergency fund" so when I have an emergency, I don't have to beg the banks for money. One nice side effect of having an emergency fund is that you can sleep better at night.
 
2012-07-30 06:22:56 PM

DrPainMD: thompsonius: I see this is the thread where we smugly brag about being debt free instead of commenting on the actual topic of the article.

Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.

I doubt that any of the debt-free farkers are stuffing cash into mattresses. Other than a car payment and 10% of my limit on credit cards (zero balances are not as good for your credit rating), I'm also debt free, but, unlike dchurch0, I don't have a mortgage because mine is paid off.


Congrats on paying your mortgage off. That would be very nice.

To be honest, I would have a mortgage if I could. I went thru a crappy divorce a few years ago. We had a house, which I had to sell in order to move for the job I currently have. This was in 2009, and it wound up being a short sale, so my credit is far from perfect. Top it all off with the fact that the ex stopped paying her car payment, which had my name on it. I paid off the bad debt to stop it from getting repo'd, took the car back, and traded it in on what I have now.

I can't qualify for a mortgage right now. So I took the extra money I had coming in and opened a Roth IRA and am maxxing it out. I'm also throwing about $1000 in savings every month and spending the leftovers. I've got a nice Traeger grill, lots of brewing equipment, a website I'm playing around with as a hobby, and a DayZ server that I pay for. I couldn't have done any of these things a few years ago. It's just nice to be able to have spending money again.

I'm hoping to build up a nice chunk of cash and put 50% down when I decide to buy. If I can do that and get a 15 year mortgage, I think I'll be OK.
 
2012-07-30 06:25:16 PM

detroitdoesntsuckthatbad: I for one would like to thank BoA for that stunning 0.35% interest rate I'm earning on my money market this month.


Bank of America lost me as a customer forever as soon as my car loan was paid off. Every month(no exaggeration) for that last eight months of my loan, every time I made my car loan payment, they would send me nasty letters saying that I hadn't made the payment. And every month, I'd have to go to my bank and get a copy of the cancelled check to show them that, yes, I had made my payment.

It seems that they were taking my check and applying it to a BoA credit card, even though my check was submitted with the loan account number written on it AND with the actual statement slip.

The problem with all of that is I DIDN'T HAVE A CREDIT CARD WITH THEM. It's like they just made one up for me and started sticking my car loan payments on it. I was probably the only BoA customer with a positive balance on his credit card.

Needless to say, I haven't set foot in there in almost four years. And Lord willing, I never will again.
 
2012-07-30 06:54:50 PM

limeyfellow: Of course cash is not always king when the money market crashes and that cash it worth dirt. If only we didn't avoid infrastructure upgrades for 60 years


Then what the hell has the federal government been doing with gasoline tax revenues?
 
2012-07-30 07:04:36 PM

o5iiawah: Then what the hell has the federal government been doing with gasoline tax revenues?


I'm guessing they were forking over billions of dollars in subsidies to the oil companies with it.
 
2012-07-30 07:07:36 PM

dustman81: The borrower is slave to the lender.


Dumbest thing I've read today.

Yes, because slaves were able to simply walk away from their owners any time they wished...

Hint: You never actually have to pay anything back. Just don't expect to borrow anything ever again. Worst they can do is take back the collateral and attempt (and often fail) to have any future reported wages garnished. Disobedience toward a slave master was a death sentence. Disobedience toward a creditor is an inconvenience.

/don't have a whole hell of a lot of debt
//could liquidate tomorrow and have cash in pocket
///prefer to keep my stuff
 
2012-07-30 07:19:34 PM

Kuroshin: dustman81: The borrower is slave to the lender.

Dumbest thing I've read today.

Yes, because slaves were able to simply walk away from their owners any time they wished...

Hint: You never actually have to pay anything back. Just don't expect to borrow anything ever again. Worst they can do is take back the collateral and attempt (and often fail) to have any future reported wages garnished. Disobedience toward a slave master was a death sentence. Disobedience toward a creditor is an inconvenience.

/don't have a whole hell of a lot of debt
//could liquidate tomorrow and have cash in pocket
///prefer to keep my stuff


Tell that to those who have to dodge collector calls and get summonses that they are being sued. Tell that to those who lose their security clearance due to poor credit. Tell that to those who are denied jobs and housing due to poor credit.
 
2012-07-30 07:19:54 PM
I'm sure there's a fee or two that will remedy the situation for them.
 
2012-07-30 07:48:37 PM

DrPainMD: If you understood economics, you would realize that the ONLY cure for a bubble is for it to pop. Adding massive debt to a problem caused by massive debt can't fix the problem, because your prosperity is a debt-fueled illusion and that no matter how good your economy looks, you will never be in a position to pay the debt back without bringing down the whole house of cards. 1946 saw one of the best year-over-year increases in Americans' standard of living. The cause was the end of WW2 and the termination of millions, if not tens of millions, of defense-related jobs.


I'm just curious, do you have a source about this year-over-year increase in standard of living? Economically we normally quantify that through the per capita GDP of a country. The U.S. GDP per capita actually fell (according to both the BLS and Angus Maddison's historical GDP index) in 1946 by quite a bit while also being hit with an 8.5% inflation rate from the ratcheting down of WWII price controls. This doesn't seem to jive with your story, so I'd like to know where you got your information from. Thanks.
 
2012-07-30 07:48:43 PM
Bad USA. BAD!!

Now go and consume so we can prop up our economy with unsustainable growth and pray we outlast China for the Sarbanes-Oxley championship.
 
2012-07-30 07:52:12 PM

Kuroshin:
Hint: You never actually have to pay anything back. Just don't expect to borrow anything ever again. Worst they can do is take back the collateral and attempt (and often fail) to have any future reported wages garnished.


Depends who you borrow from. Banks and the like are pretty much limited to repossession and seizing collateral, maybe garneshing a pay cheque. But people who are late paying back Vinny in red hook tend to have accidents.

END COMMUNICATION
 
kab
2012-07-30 07:53:14 PM

thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.


And dumbest post of the year award goes to....
 
2012-07-30 07:59:35 PM
I've been offered a couple of credit cards with 12-18 months of zero interest on balance transfers AND purchases. Over the last two years, I've probably purchased upwards of $10,000 and stretched the payments out for months while not paying a dime in interest. New Mac Pro, new DSLR, weeklong trip to Vegas. It's awesome. If it's also jamming a dick up the ass of the 1%, then it's time for a new Macbook Air and a trip to the local VIP room!
 
2012-07-30 08:13:43 PM
Debt is a tool, used to obtain something that is more valuable for you to have now instead of later.

Getting debt for other purposes is either financially short sighted or you love "risk" type behaviour without the associated rewards.
 
2012-07-30 08:17:22 PM

dustman81: Kuroshin: dustman81: The borrower is slave to the lender.

Dumbest thing I've read today.

Yes, because slaves were able to simply walk away from their owners any time they wished...

Hint: You never actually have to pay anything back. Just don't expect to borrow anything ever again. Worst they can do is take back the collateral and attempt (and often fail) to have any future reported wages garnished. Disobedience toward a slave master was a death sentence. Disobedience toward a creditor is an inconvenience.

/don't have a whole hell of a lot of debt
//could liquidate tomorrow and have cash in pocket
///prefer to keep my stuff

Tell that to those who have to dodge collector calls and get summonses that they are being sued. Tell that to those who lose their security clearance due to poor credit. Tell that to those who are denied jobs and housing due to poor credit.


Just like the whipping, burning, rape, outright murder, and horrific torture faced by slaves, right? Douche.
 
2012-07-30 08:27:41 PM

WhiskeySticks: Debt is dumb, cash is king, and the payed off home mortgage has taken the place of the BMW as the new status symbol of choice.


ha HAH
5 months and I am FREE FREE FREE
 
kab
2012-07-30 08:31:55 PM

Great_Milenko: I've been offered a couple of credit cards with 12-18 months of zero interest on balance transfers AND purchases. Over the last two years, I've probably purchased upwards of $10,000 and stretched the payments out for months while not paying a dime in interest. New Mac Pro, new DSLR, weeklong trip to Vegas. It's awesome. If it's also jamming a dick up the ass of the 1%, then it's time for a new Macbook Air and a trip to the local VIP room!


Make sure to thank someone who's paying interest (or cash) for enabling cards like this to exist.
 
kab
2012-07-30 08:32:44 PM

YixilTesiphon: Just like the whipping, burning, rape, outright murder, and horrific torture faced by slaves, right? Douche.


Because 'that' is the only form and definition of slavery, amirite?
 
2012-07-30 08:34:41 PM

PacManDreaming: o5iiawah: Then what the hell has the federal government been doing with gasoline tax revenues?

I'm guessing they were forking over billions of dollars in subsidies to the oil companies with it.


Oil companies dont get subsidies. This is the biggest lie out there today. The biggest profiteer off the oil industry is the US government who nary has to lift a shovel to reap billions of dollars each year. Oil companies pay not only billions in corporate income tax but the government also gets a piece of the gas tax. More billions. The couple of billion that oil companies get to write off as a loss or operation expense is not "welfare" nor does it come out of the pockets of taxpayers. It simply reduces their liability unless of course, you believe that 100% of oil company profits are property of the collective.

If I make $50k and donate $1k to charity, I have reduced my tax liability by that amount and now pay tax on the $49k. I did not get a handout from government and it did not cost anybody any money to provide this. No taxpayer is providing me a "subsidy" to support a charity. I'm still paying taxes. So are the oil companies.

So you're wrong.
 
2012-07-30 08:48:49 PM

o5iiawah: PacManDreaming: o5iiawah: Then what the hell has the federal government been doing with gasoline tax revenues?

I'm guessing they were forking over billions of dollars in subsidies to the oil companies with it.

Oil companies dont get subsidies. This is the biggest lie out there today. The biggest profiteer off the oil industry is the US government who nary has to lift a shovel to reap billions of dollars each year. Oil companies pay not only billions in corporate income tax but the government also gets a piece of the gas tax. More billions. The couple of billion that oil companies get to write off as a loss or operation expense is not "welfare" nor does it come out of the pockets of taxpayers. It simply reduces their liability unless of course, you believe that 100% of oil company profits are property of the collective.

If I make $50k and donate $1k to charity, I have reduced my tax liability by that amount and now pay tax on the $49k. I did not get a handout from government and it did not cost anybody any money to provide this. No taxpayer is providing me a "subsidy" to support a charity. I'm still paying taxes. So are the oil companies.

So you're wrong.


It's true that they don't get paid a direct subsidy. They do get tax credits, a whole boatload of them. Fossil fuel companies receive $57 billion in tax credits, not counting the 15.3 that comes from foreign exemptions so long as the money stays overseas (all corporations have this opportunity, so it would be unfair to count that as an energy only tax credit).

If interested, a good overview of energy taxation policy can be found here:

Link
 
2012-07-30 09:19:28 PM

KhanAidan: Fossil fuel companies receive $57 billion in tax credits, not counting the 15.3 that comes from foreign exemptions so long as the money stays overseas (all corporations have this opportunity, so it would be unfair to count that as an energy only tax credit).


The biggest of those tax credits is Internal Revenue Code:Sec. 199. Deduction relating to income attributable to domestic production activities which other companies like Apple and Google also take advantage of.

As of 2010 that deduction was increased to 9% of qualified income, except for oil and gas companies where it was kept at 6%.

The result is a company like Apple, which enjoys a higher profit margin than oil companies by about 2-3x, also gets to deduct a higher percentage of that profit via Section 199, a so called "oil company subsidy".
 
2012-07-30 09:32:15 PM

beer4breakfast: As of 2010 that deduction was increased to 9% of qualified income, except for oil and gas companies where it was kept at 6%.

The result is a company like Apple, which enjoys a higher profit margin than oil companies by about 2-3x, also gets to deduct a higher percentage of that profit via Section 199, a so called "oil company subsidy".


Oil & Gas companies may be taking the 199 as well, but it wasn't listed in the link I provided because the 199 is a tax deduction not a tax credit. The 199 reduces their taxable income. The $57 billion in tax credits reduces their actual tax payment.
 
2012-07-30 09:32:45 PM
Consumer debt can bea very bad thing if managed poorly. Mortgages and student loans are less so, but I'm looking forward to the day I make the last payment on mine.

Commercial debt is something else, though. Having access to liquidity in the form of debt is vital for day-to-day business transactions and for businesses just starting up. The credit crunch was so bad because businesses could no longer rely on the banking system for credit.
 
2012-07-30 10:15:43 PM
So, based on the advice in this thread, I should invest in... a new gas grill.

Cool.
 
2012-07-30 10:17:56 PM

sendtodave: I should invest in... a new gas grill.


For me, it is something that society cannot cannot make more of - land. Specifically, geared toward land in counties that is mostly public land.
 
2012-07-30 10:22:05 PM
How the fark is this cool? It's next to impossible to find a decent CD, bond, or any kind of safe parking spot for my money where it keeps up with inflation. This means some of my peers, who are older and should not have as much in mutual funds, are keeping their money in the market and if crashes we have a big problem (my mutual fund is up for the year, but down for the last quarter). We already have a bunch of boomers who aren't retiring because their 401k was wiped out in the last crash and now can't retire. Which in turn means no one under them can move up. So yeah you can get 1.99% on a mortgage or car loan (at least at UMCU) but you also aren't getting a promotion any time soon.

Basically my money is parked in safe areas where I'm not losing principle, but I'm losing ground to inflation. What interest I do earn only serves to mitigate the ground I lose.

/really shiatty interest rates means not much demand for borrowing, which is not ideal
//no borrowing, no expansion, unless of course the company has an Apple-esque stockpile of cash to do it sans loans
 
2012-07-30 10:45:37 PM
www.glennbeck.com
 
2012-07-30 10:51:21 PM
Want a better rate than less than 1% that the big banks give?

I have 3 words for you.

Closed
End
Funds

Trades like a stock, pays monthly dividends. Some are north of 7 to well over 9%!
 
2012-07-30 11:33:38 PM
Reading about all of you guys paying off debt is motivation for the Wife and I. We can't wait to ditch our student loans.

/being a poor college student is lame
//worth it in the end...hopefully?
///fark banks
 
2012-07-30 11:42:42 PM
I'm debt-free, but I'm not making the big bucks like I did prior to 2008...( when I had easily manageable CC debt )

/ kinda ambivalent about that
 
2012-07-30 11:59:49 PM

kab: thompsonius: Side note to debt free smugsters - hoarding your cash is a negative investment. It's really not that complicated, but apparently your liberal arts degree didn't cover that.

And dumbest post of the year award goes to....


I don't see how that's a dumb post. Unless you are referring to the idea of debt free liberal arts majors.

The only reason I have $$ in my credit union account is that I'm looking for a good investment to throw my money at. I think I'll get file a pile of provisional patents and sell the ideas to patent trolls to pay up for full patents.
 
2012-07-31 12:11:15 AM

Magorn: (which if you understand economics, means this is an INSANE time to be cutting government spending. We should be borrowing like Banshees for long term infrastructure projects and to create jobs because we'll never be able to get the money for them this cheaply ever again.)


The problem is, we've been shifting from longer-term instruments (30 year) to shorter term (10 years, 5 years, or even less). That means that debt has to be rolled over frequently. Not to mention that as things are going, we're NEVER going to start paying back any of the debt. That means either A) the fed has to keep interest rates low forever and sucking up increased amounts of capital, thus keeping the US in a period of low-to-no growth forever, or B) interest rates rise, the cost of our borrowing goes up exponentially, and the deficit and debt grow exponentially along with it. Either way we're screwed. Borrowing "like Banshees" (congrats on capitalizing that by the way; clearly you know your way around English) would just add to the problem.
 
2012-07-31 12:39:58 AM
Paying off your debt is fantastic for the individual, but pretty shiatty for the economy overall in the long run. If you limit yourself to good debt, think secured loans like mortgages, even cars, you give yourself the ability to almost double your buying power. By pulling out of the debt market, you are basically removing yourself from the economy in many ways. Unless you counter it with increased spending, you actually damage the economy by doing so. People who pay off all debt and start putting a lot in savings are causing the very drop in interest rates that is hurting them.

I'm not in any way recommending that you go out there and max out a crap-ton of credit cards, but if you have that extra cash, go buy something with some of it. Look at rental properties, a great way to use debt to make money, especially with the number of people out of the home-buying market. If you have it sit around in your savings account, you are effectively removing it from the economy.
 
2012-07-31 12:44:58 AM

RangerTaylor: I'm not in any way recommending that you go out there and max out a crap-ton of credit cards, but if you have that extra cash, go buy something with some of it.


So, again... new grill?

I need a way to convince my fiancee of the wisdom of this financial advice.
 
2012-07-31 12:54:35 AM

Magorn: In fact, right now if you look at the returns on US Treasuries as compared to the rate of inflation, you realize that people are actually paying US to let us borrow money from them.

(which if you understand economics, means this is an INSANE time to be cutting government spending. We should be borrowing like Banshees for long term infrastructure projects and to create jobs because we'll never be able to get the money for them this cheaply ever again.)


Nope, gotta stay loyal to Grover and his grade school no taxes pledge.
 
2012-07-31 01:07:06 AM

Slaves2Darkness: This year I took my nephews to Disney just because I could.


www.polyvore.com
 
2012-07-31 01:14:19 AM

sendtodave: RangerTaylor: I'm not in any way recommending that you go out there and max out a crap-ton of credit cards, but if you have that extra cash, go buy something with some of it.

So, again... new grill?

I need a way to convince my fiancee of the wisdom of this financial advice.


Absolutely, it gives you an easy, low-price and low-calorie way of preparing enjoyable food at home as well as encouraging family time on the patio while you are grilling up those steaks. And you can find American-made ones cuz fark the commies.
 
2012-07-31 01:32:53 AM

RangerTaylor: Absolutely, it gives you an easy, low-price and low-calorie way of preparing enjoyable food at home as well as encouraging family time on the patio while you are grilling up those steaks. And you can find American-made ones cuz fark the commies.


安格斯T/丁骨牛排 育肥牛T骨牛排 美国肥牛T骨牛扒 西餐牛扒

广东 广州

55.00元/500g


Hopefully not made of drywall. Or "miscellaneous."
 
2012-07-31 01:44:07 AM
How is this a cool tag? Bernanke is keeping interest rates low so people park their money in the stock market. This is how bubbles are created; with all this easy money sloshing around, everyone is looking for a quick buck. I'm thinking dot-com 2.0. Groupon, Facebook, Zynga, and Kayak come to mind. Now there's this babysitter website? If you feel like buying stocks to try and get that magic 10% return, be careful. The Wall Street banks are just siphoning off your wealth, and in the end it's the middle and lower class that will get screwed.
 
2012-07-31 01:49:45 AM

voodoojuice: If you feel like buying stocks to try and get that magic 10% return, be careful. The Wall Street banks are just siphoning off your wealth, and in the end it's the middle and lower class that will get screwed.


Right on! They're just, like, leeches, man.

I'll just keep all my money in a sock!
 
2012-07-31 02:05:27 AM
Baby boomers have had the strange distinction of watching their children grow up to be their grandparents

/ Who also learnt financial responsibility the hard way
 
2012-07-31 02:21:48 AM
I hate these farking threads.
 
2012-07-31 02:33:36 AM

HeadLever: Magorn: which if you understand economics, means this is an INSANE time to be cutting government spending.

Not when you consider that we 'never' pay off this debt and only roll them over. When interest rates normalize and this debt is rolled over into new debt, the shiat will hit the fan.



Do you know how I know you don't know shiat about 20th century financial history?

Here's how it works. Finish WWII - the US has a debt to GDP ratio of 125% (and the UK has double that, but that's another story).

Did we pay it off? No, we did not. But we did shrink it. We paid the interest, and we grew the economy (a lot of that via borrowing). Running roughly balanced budgets, 20 years later that debt was an entirely manageable 60% of GDP - without actually paying any of the principle.

See, a nation's balance sheet doesn't work like your household budget. Longer time frames, and long term growth in revenues. You can actually run deficits indefinitely as long as the amount averages less than your long-term growth trend rate. And if you invest the money in things that grow the economy, its a really good idea to do so, if you don't you're leaving money on the table.

Note: I'm not saying our deficits today really are below the long-term growth rate, or that we're investing the money wisely. I'm just saying that it can work that way.
 
2012-07-31 02:41:15 AM

o5iiawah: limeyfellow: Of course cash is not always king when the money market crashes and that cash it worth dirt. If only we didn't avoid infrastructure upgrades for 60 years

Then what the hell has the federal government been doing with gasoline tax revenues?


You mean the gasoline tax that they haven't raised the rate on in 20 years? While vehicles became more fuel efficient? And the cost of maintaining infrastructure kept going up?

Yeah, gee, I wonder. Seriously, I don't expect much from you, but even by your usual standards, this is astoundingly dumb. What, did you let Skinnyhead borrow your account?
 
2012-07-31 02:46:06 AM

sendtodave: So, again... new grill?

I need a way to convince my fiancee of the wisdom of this financial advice.


i.i.com.com

Hey, get down wit' yo' bad self.
 
2012-07-31 02:49:53 AM

MisterRonbo: o5iiawah: limeyfellow: Of course cash is not always king when the money market crashes and that cash it worth dirt. If only we didn't avoid infrastructure upgrades for 60 years

Then what the hell has the federal government been doing with gasoline tax revenues?

You mean the gasoline tax that they haven't raised the rate on in 20 years? While vehicles became more fuel efficient? And the cost of maintaining infrastructure kept going up?

Yeah, gee, I wonder. Seriously, I don't expect much from you, but even by your usual standards, this is astoundingly dumb. What, did you let Skinnyhead borrow your account?


I have him - o5iiawah - flagged as (favorite: Austrian school dipstick) with good reason.
 
2012-07-31 03:04:26 AM

El Pachuco: I have him - o5iiawah - flagged as (favorite: Austrian school dipstick) with good reason


I think I'm going to start favoriting people that post who they've favorited as "Self-important weenie who labels people."

Then I'll post that I favorited them as such.
 
2012-07-31 03:44:38 AM

sendtodave: El Pachuco: I have him - o5iiawah - flagged as (favorite: Austrian school dipstick) with good reason

I think I'm going to start favoriting people that post who they've favorited as "Self-important weenie who labels people."

Then I'll post that I favorited them as such.


You're racist for pointing out someone is racist!

/you probably won't get it, but intelligent people will
 
2012-07-31 04:58:58 AM

brap: I know this farking sucks, it's hard to find a conservative investment that keeps up with inflation in this day and age.


Don't money-market accounts and investments in index funds keep up with inflation or better almost by definition? If those are too risky for you, it's probably time to start trying to build a self-sufficient agricultural commune because you're not cut out for participation in a capitalist system, but I guess if those are too risky for you and you still insist on investing there are still government bonds.

//Also, given the US's specific policies designed to artificially avoid inflation the last decade or two, I was tempted to lead with a "what's an inflation?" joke.
 
2012-07-31 07:19:26 AM

MisterRonbo: HeadLever: Magorn: which if you understand economics, means this is an INSANE time to be cutting government spending.

Not when you consider that we 'never' pay off this debt and only roll them over. When interest rates normalize and this debt is rolled over into new debt, the shiat will hit the fan.



Do you know how I know you don't know shiat about 20th century financial history?

Here's how it works. Finish WWII - the US has a debt to GDP ratio of 125% (and the UK has double that, but that's another story).

Did we pay it off? No, we did not. But we did shrink it. We paid the interest, and we grew the economy (a lot of that via borrowing). Running roughly balanced budgets, 20 years later that debt was an entirely manageable 60% of GDP - without actually paying any of the principle.

See, a nation's balance sheet doesn't work like your household budget. Longer time frames, and long term growth in revenues. You can actually run deficits indefinitely as long as the amount averages less than your long-term growth trend rate. And if you invest the money in things that grow the economy, its a really good idea to do so, if you don't you're leaving money on the table.

Note: I'm not saying our deficits today really are below the long-term growth rate, or that we're investing the money wisely. I'm just saying that it can work that way.


We have record peacetime deficits as a percentage of GDP that we are financing with record low interest rates.

Yeah, it can work out if you tighten the belt dramatically at the end of the debt-requiring event, like we did after WWII, but where is the impetus to belt tighten now?

And you fail to address the roll-over issue. If and when the economy turns north, which you are assuming with your "grow our way out of debt scenario", interest rates will spike. With 2/3rds of fed debt due within 5 years and 85% within 10, those rate hikes are going to kick us in the ass pretty quickly.

Lastly, borrowing because you need to win a war 70 years ago doesn't mean we should "borrow like banshees now because just because interest rates are low".
 
2012-07-31 08:17:31 AM
It makes absolutely no sense to me why anyone would maintain a "savings account" or invest in stocks, etc while at the same time slowly paying off a credit card debt or car loan or mortgage payment little by little each month.

Regardless of whatever you're "making" on your investments, that money is being poured straight down the drain paying off the interest on your long-term debts.

If you want to "make" far more money, you will empty out that savings account, sell off all your stocks, etc, and pay off as much of the principal as possible on all your debts immediately.
 
2012-07-31 08:50:27 AM

Fooby: It makes absolutely no sense to me why anyone would maintain a "savings account" or invest in stocks, etc while at the same time slowly paying off a credit card debt or car loan or mortgage payment little by little each month.


If the return on your investment is greater than the interest rate on your debt, then it's foolish to pay down the debt too quickly. You're making a net gain essentially using someone else's money. If I have $0, but can borrow $100 at 2.5% interest, and invest that money with a highly probable 5% return, it's stupid not to (assuming "highly probable" means "within your personal risk tolerance").

That's the advantage to fixed rate mortgages, when you can get in during a historically low interest period like we're in now. Leverage isn't inherently bad, it's just something that has to be used carefully.

//a few years into a 15-yr mortgage, with a low-at-the-time interest rate.
 
2012-07-31 08:54:12 AM

sendtodave: So, based on the advice in this thread, I should invest in... a new gas grill.

Cool.


Traeger is an electric pellet grill... but yeah, you should totally get one. I love mine.
 
2012-07-31 08:58:59 AM

Fooby: It makes absolutely no sense to me why anyone would maintain a "savings account" or invest in stocks, etc while at the same time slowly paying off a credit card debt or car loan or mortgage payment little by little each month.

Regardless of whatever you're "making" on your investments, that money is being poured straight down the drain paying off the interest on your long-term debts.

If you want to "make" far more money, you will empty out that savings account, sell off all your stocks, etc, and pay off as much of the principal as possible on all your debts immediately.


I get what you are saying, but you fail to consider that some people hold money in savings as a "rainy day" fund. If you pay that money towards debt, you could be boned if something unexpected happens.
 
2012-07-31 09:07:31 AM

DrPainMD: Magorn: which if you understand economics, means this is an INSANE time to not be cutting government spending.

FTFY

If you understood economics, you would realize that the ONLY cure for a bubble is for it to pop. Adding massive debt to a problem caused by massive debt can't fix the problem, because your prosperity is a debt-fueled illusion and that no matter how good your economy looks, you will never be in a position to pay the debt back without bringing down the whole house of cards. 1946 saw one of the best year-over-year increases in Americans' standard of living. The cause was the end of WW2 and the termination of millions, if not tens of millions, of defense-related jobs.



Well as long as we are looking at history. Look at the recession of 1937, it was a combination of factors admittingly, but people will cite government cut back and monetary policy tightening.

That is much more related to today than 1946.
 
2012-07-31 09:19:05 AM

PacManDreaming: detroitdoesntsuckthatbad: I for one would like to thank BoA for that stunning 0.35% interest rate I'm earning on my money market this month.

Bank of America lost me as a customer forever as soon as my car loan was paid off. Every month(no exaggeration) for that last eight months of my loan, every time I made my car loan payment, they would send me nasty letters saying that I hadn't made the payment. And every month, I'd have to go to my bank and get a copy of the cancelled check to show them that, yes, I had made my payment.

It seems that they were taking my check and applying it to a BoA credit card, even though my check was submitted with the loan account number written on it AND with the actual statement slip.

The problem with all of that is I DIDN'T HAVE A CREDIT CARD WITH THEM. It's like they just made one up for me and started sticking my car loan payments on it. I was probably the only BoA customer with a positive balance on his credit card.

Needless to say, I haven't set foot in there in almost four years. And Lord willing, I never will again.


Their mortgage division spontaneously decided to pay someone else's yearly property tax bill out of our escrow account. They actually sent us proof of it and then told us they'd TRY to get that money back for us and they'd let us know.

Scumbags. Entirely.
 
2012-07-31 09:21:16 AM

Fooby: It makes absolutely no sense to me why anyone would maintain a "savings account" or invest in stocks, etc while at the same time slowly paying off a credit card debt or car loan or mortgage payment little by little each month.

Regardless of whatever you're "making" on your investments, that money is being poured straight down the drain paying off the interest on your long-term debts.

If you want to "make" far more money, you will empty out that savings account, sell off all your stocks, etc, and pay off as much of the principal as possible on all your debts immediately.


The reason to keep money in the savings account is for quick access in case of emergency needs. If my car breaks down, I lose my job, or any number of other emergencies occur, I've got a nice little cushion in my savings account. I keep about 2 months expenses in there. Some like to keep more than that; most keep less. Yeah, it's losing me a bit of money not using that to pay interest, but it gains me peace of mind.

My main investment in stocks is my 401k. I'd pay more in penalties getting that money out than I could ever hope to recoup in the form of lowered interest payments. Contributing less would also lose me money because then I wouldn't be taking advantage of employer matching contributions.

As for the mortgage, I don't have one, but a lot of people are getting mortgages at ~4% right now. It wouldn't make sense to cash out investments that make >4% to pay off a loan at 4%.
 
2012-07-31 09:27:16 AM
GOOD

Interest is the free market's black hole of pain and death.

IM benevolent dictator O
 
2012-07-31 09:55:59 AM

thurstonxhowell: The reason to keep money in the savings account is for quick access in case of emergency needs. If my car breaks down, I lose my job, or any number of other emergencies occur, I've got a nice little cushion in my savings account. I keep about 2 months expenses in there. Some like to keep more than that; most keep less. Yeah, it's losing me a bit of money not using that to pay interest, but it gains me peace of mind.

My main investment in stocks is my 401k. I'd pay more in penalties getting that money out than I could ever hope to recoup in the form of lowered interest payments. Contributing less would also lose me money because then I wouldn't be taking advantage of employer matching contributions.

As for the mortgage, I don't have one, but a lot of people are getting mortgages at ~4% right now. It wouldn't make sense to cash out investments that make >4% to pay off a loan at 4%.


THIS, employer matching 401K and a nest egg (liquid savings) are a perfectly rational response in any economy. I just signed a 30 yr at 3.625 fixed. Still have student loans too, but I wasn't going to use my down payment for a beautiful house in the burbs to raise my (yet to be born) daughter.

\YMMV
\\hoping for higher inflation rather than increasing interest rates, if the fed acts this week
 
2012-07-31 10:48:02 AM

kab: YixilTesiphon: Just like the whipping, burning, rape, outright murder, and horrific torture faced by slaves, right? Douche.

Because 'that' is the only form and definition of slavery, amirite?


That is what slavery is. Torture and fundamental debasement.

It is not analogous to voluntary debt or employment, no matter how many pseudo-intellectuals claim it is.
 
2012-07-31 10:52:07 AM

MisterRonbo: Do you know how I know you don't know shiat about 20th century financial history?


Last I looked, we are in the 21st century. Trying to equate the economic climate of the 1940s with today is beyond laughable. Take a look at the unfunded oblibations we had then vs now and get back to me on your false equivalency.

I'm just saying that it can work that way.

Sure it can. And Dogs and Cats can also live together. Doesn't mean that it is going to happen. Take a look at the projections by the CBO that I reference and you can see that simply bringing down the deficit (as a percent of GDP) to equal to the GDP growth rate is going to be a monumental task. And no, we are not going to simply 'grow' our way out of this. Other sacrifices are going to be needed.
 
2012-07-31 11:03:42 AM

sendtodave: I think I'm going to start favoriting people that post who they've favorited as "Self-important weenie who labels people."


Notice he never actually addresses my actual arguments? Not hard to determine why that is.
 
2012-07-31 11:57:31 AM

thurstonxhowell: Fooby: It makes absolutely no sense to me why anyone would maintain a "savings account" or invest in stocks, etc while at the same time slowly paying off a credit card debt or car loan or mortgage payment little by little each month.

Regardless of whatever you're "making" on your investments, that money is being poured straight down the drain paying off the interest on your long-term debts.

If you want to "make" far more money, you will empty out that savings account, sell off all your stocks, etc, and pay off as much of the principal as possible on all your debts immediately.

The reason to keep money in the savings account is for quick access in case of emergency needs. If my car breaks down, I lose my job, or any number of other emergencies occur, I've got a nice little cushion in my savings account. I keep about 2 months expenses in there. Some like to keep more than that; most keep less. Yeah, it's losing me a bit of money not using that to pay interest, but it gains me peace of mind.

My main investment in stocks is my 401k. I'd pay more in penalties getting that money out than I could ever hope to recoup in the form of lowered interest payments. Contributing less would also lose me money because then I wouldn't be taking advantage of employer matching contributions.

As for the mortgage, I don't have one, but a lot of people are getting mortgages at ~4% right now. It wouldn't make sense to cash out investments that make >4% to pay off a loan at 4%.


I think the question is where to put cash on hand now vs paying off mortgages/ debts.

I have a fair chunk above and beyond emergency funds I do not have a clue where to put. It is currently just sitting in a MM losing money to inflation.

Where to put it?
 
2012-07-31 02:03:13 PM

RangerTaylor: If you have it sit around in your savings account, you are effectively removing it from the economy


Lie.

Banks will use that savings as collateral to make loans. Unless you stuff the money in a mattress, any money in stocks, bonds, assets or even basic savings can be used as collateral to make loans, if not for you - for someone else.
 
2012-07-31 03:46:39 PM
It seems to me banking is broken in both directions.

The interest they pay now on deposits doesn't keep up with inflation.

Even if you had money to start your own bank making loans, you could never compete with those that can fire up the fake money presses. If they loose they bail themselves out and pass on the loses devaluing your currency. If you made a bad loan you lose your real assets.

In fact since there is no longer any way to actually save they have set up a system that the central banks are the only source of funds and will have a finger in every pie.

Everywhere.
 
2012-07-31 06:14:01 PM

DrPainMD: zero balances are not as good for your credit rating


Bullshiat. I've paid off my credit card balance every month for the last 16 years and my credit rating is more than 800. You're just giving money to credit card companies.
 
2012-08-01 06:22:57 AM

PacManDreaming: o5iiawah: Then what the hell has the federal government been doing with gasoline tax revenues?

I'm shocked, shocked that I'm guessing they were forking over billions of dollars in subsidies to the oil companies with it.

FTFY
 
2012-08-01 06:29:16 AM

Fear the Clam: DrPainMD: zero balances are not as good for your credit rating

Bullshiat. I've paid off my credit card balance every month for the last 16 years and my credit rating is more than 800. You're just giving money to credit card companies.


I've heard, from people who make it their job to keep track of such things, that all else equal, having a balance on your credit card, of ~10% of the limit, will give you a higher rating. What is your source? The credit bureaus don't explain their ratings, but they are made to be indicators of profit potential for use by lenders (the customers of the ratings agencies), so it makes sense.
 
2012-08-01 08:17:38 AM

DrPainMD: Fear the Clam: DrPainMD: zero balances are not as good for your credit rating

Bullshiat. I've paid off my credit card balance every month for the last 16 years and my credit rating is more than 800. You're just giving money to credit card companies.

I've heard, from people who make it their job to keep track of such things, that all else equal, having a balance on your credit card, of ~10% of the limit, will give you a higher rating. What is your source? The credit bureaus don't explain their ratings, but they are made to be indicators of profit potential for use by lenders (the customers of the ratings agencies), so it makes sense.


Oh, I don't have a source. I'm just saying that my credit rating is >800 and I haven't carried a balance in a very long time. If you think that paying finance fees every month is somehow helping your credit, don't let me stop you. I'm just saying that I don't think avoiding credit card fees will actually hurt anything other than the lender's bottom line.
 
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