A friend financed a new car a few years ago at a low 1.99% and recently told me they have been paying it off faster than the loan requires just to "get rid of the debt". I tried to reason with them, but it's difficult to get many people to understand that you're actually losing money by paying extra today when current inflation is so much higher than the rate you've locked in. Sometimes debt can be your friend if the rate is well below average.
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110 sats \ 3 replies \ @boisechampion 20 Dec 2023
I’m actually more like your friend. It’s all about emotional management which leads to better decision-making.
I don’t like the idea of somebody having power to call alone on my family. It’s an invasion into my territory.
Sometimes I lie awake stressed about my mortgage. Logically, there’s no reason to be I can pay my mortgage pretty easily with my income.
But regardless, it pisses me off that somebody owns a part of my property aka the bank.
By having less debt in our family were able to make better more long-term decisions. And we sleep better at night.
It has nothing to do with the math.
Everyone is different, and that’s OK
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11 sats \ 1 reply \ @hodlme OP 20 Dec 2023
That's a fair point, and I can understand not wanting the threat of foreclosure or repossession held over you. Technically the bank does still own part of the property, and with a vehicle it's much easier to end up owing more than the remaining equity.
On the flipside, my friend could have paid cash for the car, and if that cash was still sitting in a money market account or better in BTC they would be well ahead right now.
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30 sats \ 0 replies \ @boisechampion 20 Dec 2023
I don't think there are wrong decisions when it comes to debt, savings etc. The major factor at play is your internal state.
Does the decision make you calmer and make better long term decisions? Thats how I operate.
I know guys in my industry who are leveraged to the tits with 20 rentals. They could care less. Good for them. It could never be me.
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0 sats \ 0 replies \ @cryotosensei 23 Dec 2023
I relate to the idea of sleeping better at night
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15 sats \ 2 replies \ @kytt 20 Dec 2023
Debt is never your friend if your savings are not gaining more interest than the debt is.
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10 sats \ 1 reply \ @boisechampion 20 Dec 2023
Debt is never your friend. Preach it!
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0 sats \ 0 replies \ @hodlme OP 20 Dec 2023
I'll agree with that on a Bitcoin standard for sure. On an inflating dollar standard, it's not quite as clear to me.
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0 sats \ 0 replies \ @cryotosensei 23 Dec 2023
Your friend sounds like my kind of guy. I paid off my housing loan in 5 years, whereas the norm in my country is to stretch the loan for 20-30 years, refinance it whenever necessary and invest money in investments that will yield more than the mortgage interest rate. It works for my countrymen but I just hate the idea of being in debt. After I paid off my mortgage, I felt so much lighter and prouder of myself. There are many opportunities to earn money. I understand that nothing beats time in the market, but honestly, I don’t have to optimise every single dollar of mine. I value peace and clarity of mind more.
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