View Poll Results: Do you agree with the statement in the OP?

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Thread: More Debt = More Wealth

  1. #11
    Educator Gabriel's Avatar
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    Re: More Debt = More Wealth

    Quote Originally Posted by Aunt Spiker View Post
    If you have to pay it back to someone - it's not wealth.
    Well a debt is a perceived value or worth by the institution making the investment on whatever it might be. Since the bank really does make the loan out of thin air the value of the loan is determined by a subjective value of the borrower. Clearly the loaner believes the individual making the loan is able to pay back more then they borrowed. The real asset is obviously the borrower and their promise to pay it back. So debt may be a reflection of financial value of said thing.

    EDIT: Further it maybe veiwed that the institution making the loan believes the borrower is worth more then the amount owing .. so debt is not even a full recognition of the actual value of the borrower.
    Last edited by Gabriel; 07-06-10 at 12:14 PM.

  2. #12
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    Re: More Debt = More Wealth

    Quote Originally Posted by Gabriel View Post
    hrm.. well, if everyone were to go pay their debt off we'd run out of money.
    This is because the bank charges interest mainly.

  3. #13
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    Re: More Debt = More Wealth

    Quote Originally Posted by Mellie View Post
    Do you agree with this statement - "The more money you borrow, the wealthier you are."
    There are only a few instances when debt will lead to wealth.

    Investment in appreciating assets and investment in money saving assets.
    That's really it.

    Wealth is not a measurement of how much stuff you have.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: More Debt = More Wealth

    Quote Originally Posted by megaprogman View Post
    prongman? That is truly awesome (seriously, I like prongman better than progman, its somehow more manly)

    Also, it depends on the type of investment. Some can be sold off later for a profit while others can generate profits in a way that is continually paid out.
    Every little helps.

  5. #15
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    Re: More Debt = More Wealth

    Quote Originally Posted by Mellie View Post
    Do you agree with this statement - "The more money you borrow, the wealthier you are."
    Depends what you're spending the money on, and why. If you're borrowing money for something worthwhile (e.g. college education, a cheap car to get to work, starting a business, investments that pay a higher interest rate than your cost of capital) then yes, it will make you wealthier. If you're borrowing money for consumer goods (e.g. a trip to the Bahamas, a brand new car, a big-screen television), then borrowing money will financially ruin you eventually.
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  6. #16
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    Re: More Debt = More Wealth

    If I borrow at 2% and earn at 6% (and assuming adequate cash flow to meet debt servicing time lines) am I better off?

    Absolutely.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  7. #17
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    Re: More Debt = More Wealth

    OK.. serious business here... If no one had any debt no one would have any money.

    Where do you think money comes from? Some magical thing that exists on it’s own? Poof.. suddenly people just have money.

  8. #18
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    Re: More Debt = More Wealth

    Quote Originally Posted by Gabriel View Post
    OK.. serious business here... If no one had any debt no one would have any money.

    Where do you think money comes from? Some magical thing that exists on it’s own? Poof.. suddenly people just have money.
    Well it depends on what kind of money system your talking about.
    With fractional reserve lending removed, yea our currency would deflate heavily.
    But there would still be money, less of it and more valuable.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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  9. #19
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    Re: More Debt = More Wealth

    Borrowing money has no effect on your wealth. Wealth is your assets minus your liabilities. So, say you borrow $10k, your assets go up by $10k, your liabilities go up $10k, and it's a wash.

    Now, that said, a decision to borrow can certainly indirectly effect your wealth over time. If you are doing something with that money that is generating a higher rate of return than the interest payments on the debt, then it increases your wealth. If you are doing something with that money that generates a lower rate of return, or if you're using the money on stuff that has no return, you're obviously losing wealth. If you take out a loan to expand your business, or potentially to renovate your home even, it may well be a very smart move. If you take out a loan to pay for your cable and a trip to Hawaii, it is not a good move in terms of your wealth.

  10. #20
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    Re: More Debt = More Wealth

    Answer is other

    It all depends on what the money borrowed was used for

    Used to purchase a rental property that generates enough cash flow to cover the mortgage and other associated costs of the rental property then yes you will be wealthier (provided things go reasonably well.

    If you use the money to go on a world wide vacation, you will have a wealth of experiences, but be far worse off in monetary wealth

    Overall like most things debt can be good or bad depending on how it is used, and how much of it you have
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