Are you free of debt?

[KFC911]

Originally Posted by aschen

I think all of us get the fact that there is an opportunity cost associated with not using debt to your financial advantage


The counterpoint is that you might not need any sort of ROI if you already have everything you need paid for and continuing expenses are not an issue.

The discussion is philosophical and not mathematical in nature, IMHO. living at the minimum risk level is freeing for some, and you wont be able to catch that value in any simulation

What he said...

When it comes to risk verses reward, and effort involved, my corporate gig was without a doubt the proverbial "golden goose" and no investment strategy could match those returns imo. I cooked that goose and it tasted great...burp

[cgarr]

Am free since I was 42, 15 years ago, but never free of stuff like taxes, utilities ins. etc.

[Macroni]

Originally Posted by aschen

The discussion is philosophical and not mathematical in nature, IMHO. living at the minimum risk level is freeing for some, and you wont be able to catch that value in any simulation

Understand you point..... but.......There is always math..... in this equation it would be the opportunity cost of less than optimal utilization of leverage created by income cash flow.

[sammyg2]

Originally Posted by Macroni

I agree.

I always assumed in the zombie apocalypse, the one with the greatest debt would be the smart one......

And that could possibly be the ONLY scenario where that would pan out ....

[aschen]

Originally Posted by Macroni

Understand you point..... but.......There is always math..... in this equation it would be the opportunity cost of less than optimal utilization of leverage created by income cash flow.

I am an engineer, I agree that math can be used to describe quite literally anything.

However, the zero debt solution may be the optimum if you do a good job accurately modeling the utility of not worrying about investments and risk as well a assigning the appropriate cost to managing said investments. For some people anyways.

[Macroni]

Originally Posted by aschen

I am an engineer, I agree that math can be used to describe quite literally anything.

However, the zero debt solution may be the optimum if you do a good job accurately modeling the utility of not worrying about investments and risk as well a assigning the appropriate cost to managing said investments. For some people anyways.

Interesting point..... we would need life insurance actuarial to assist us.

[KFC911]

Originally Posted by aschen

I am an engineer, I agree that math can be used to describe quite literally anything.

....

Women. And 1-10 don't work....I wanna see equations

[Macroni]

Originally Posted by KC911

Women. And 1-10 don't work....I wanna see equations

I hear you.... but consumer behaviorism (study of demographics) could explain tendencies......

[Craig T]

Originally Posted by Shadetree930

A 0% auto loan is not always living above your means. Even a 2.9% loan may make sense depending on portfolio return rates.
It is a good use of other people's capital as long as you can cover the debt liability with cash if the need arises.

I don't disagree with that Shadetree930. I was emphasizing the avoidance of paying loan "interest" on a depreciating asset, like a car. A 0% auto loan is more like a scheduled deferment of the purchase price with the seller holding the car's title as security.

I think a 0% loan would make good financial sense if someone had the cash to buy the car, elected to go with a 48 month 0%, then put money equal to the car's purchase price in a solid investment over that 48 month period (or longer).

If a person has little savings, and maybe some credit card debt, than I still don't think buying a car on 0% payments is such a great idea. At two years, the balance on the 0% could still be more than the value of the car. If the person defaulted on the 0% loan, and the car was repo'd or turned in, that inequity, plus service charges, would still be put on your credit file as debt accumulating interest.

[aschen]

Originally Posted by KC911

Women. And 1-10 don't work....I wanna see equations

https://en.wikipedia.org/wiki/Chaos_theory

[pcardude]

Lol. So many rich people here.

I'll be outside blazing one in my 95 Toyota.

Late

[aschen]

I haven't shopped for a new car in a very very long time, but in general the 0% financing came in liu of a factory rebate. At least that is how it used to work, It is a promotional rate that is subsidized by the purchase price of the car.

I think if you are very strict about financially rational car buying decisions, then probably any new car is a bad buy. We all should be buying 97 4 cyl camrys. Or we can try our hand at picking the next early s type market value explosion

[KFC911]

Originally Posted by aschen

https://en.wikipedia.org/wiki/Chaos_theory

LOL...well played sir

[Craig T]

Originally Posted by pcardude

Lol. So many rich people here.

I'll be outside blazing one in my 95 Toyota.

Late

It's a Porsche forum, Duh! LOL

[pcardude]

Here I thought all Porsche owners were poor like me. Have you seen the prices of parts ?

[Craig T]

Originally Posted by aschen

We all should be buying 97 4 cyl camrys. Or we can try our hand at picking the next early s type market value explosion

Well...I'm on my hands and knees praying the last of the 997 "Mezger" Turbo's is the next "early s market explosion". If it's not, this $4,000 clutch and $2500 coolant tube welding this week is going to make me die from stupidity!

[strupgolf]

I'm 66 this friday. Not debt free, but close. We live in a low expense area, so my time is spent golfing, driving, gardening, having beers, etc. It's such a good life that I'm as happy as sh++.

[rwest]

Originally Posted by Craig T

I don't disagree with that Shadetree930. I was emphasizing the avoidance of paying loan "interest" on a depreciating asset, like a car. A 0% auto loan is more like a scheduled deferment of the purchase price with the seller holding the car's title as security.

I think a 0% loan would make good financial sense if someone had the cash to buy the car, elected to go with a 48 month 0%, then put money equal to the car's purchase price in a solid investment over that 48 month period (or longer).

If a person has little savings, and maybe some credit card debt, than I still don't think buying a car on 0% payments is such a great idea. At two years, the balance on the 0% could still be more than the value of the car. If the person defaulted on the 0% loan, and the car was repo'd or turned in, that inequity, plus service charges, would still be put on your credit file as debt accumulating interest.

I'll add to this Craig, and also guess that a default might trigger interest owed- zero percent if you don't miss a payment, but some god awful rate if you do. That's how it usually is on most loans, not sure about a car one.

[Jerome74911S]

I'm retired and have no debt, nor have I ever had any debt in my life, for anything. I live within my means, and always have done so. And I live a comfortable life, with a genuine Porsche and everything.

That said, if you have a credit card with a $5,000 limit, or a $25,000 limit, then the issuing bank's view is that you have $5K or $25K of debt, because you could spend that card's limit at any time. So, in their eyes that money is 'yours', but you need to pay it back. The fact that you didn't spend it all yet means little to the bank. Just ask them.

I have some credit cards in my pocket, so I guess I'm actually broke.

[Paul K]

Currently NOT debt free. Two mortgages.

Will be debt free when we retire, in 4.5 years.

Looking forward to that!