that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
I have learned from poker that being at the table is not a grind, the grind is living and poker is how I pass the time
Like Highcard said, there's good debt and bad debt, or +ev debt and -ev debt if you like
Student loans nowadays are probably -ev debt in the long run with the crappy job market. We're lucky in NZ that we have 0% interest on our student loans wee
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
Mig hefur alltaf langað til að vitna í sjálfan mig - Ég sjálfur
Probably would be more accurate to display yearly incomes too nonetheless loans are massively ev- except a few ones. I avoid them like the plague, never had one except on a house that I sold.
Hard to beat inflation with loan rates going between 4.5 and 17%
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
Odds are exactly 50%: it either happens or not
blackjacki2 United States. Jun 24 2012 20:58. Posts 2582
On June 24 2012 12:41 Spitfiree wrote:
its +EV for you if you take a loan and Inflations raises as you return money with less real value than the amount you took
or if you can use the money elsewhere and get a higher return than what the interest on the loan is
On June 24 2012 15:39 Achoo wrote:
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
yes true, real assets are the answer
but for clarity, what exactly do u mean by injecting lots of cash into ur credit? r u meaning upgrading ur home/real estate/asset or meaning something else? if something else, example plz?
On June 24 2012 12:41 Spitfiree wrote:
its +EV for you if you take a loan and Inflations raises as you return money with less real value than the amount you took
u seem to forget or not realize the overall effects of inflation coupled by wages for the working guy who took the loan usually being the last thing to go up
On June 24 2012 04:11 Achoo wrote:
Probably would be more accurate to display yearly incomes too
would u explain why u think this cuz I tend to disagree
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
au contraire, either way the lender does gain. Especially if we agree that more times than not the proprietary "lender" in the world is the banks
On June 24 2012 01:35 K40Cheddar wrote:
Interesting comic but not entirely accurate
ur right, it is in black & white
On June 23 2012 23:58 Highcard wrote:
that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
future outlooks are speculative - they are not facts. imo the bum or whomever is out of debt has more future earning potential as he has no debt to pay off first. When I define future earning potential, I do not look through the lens of going in debt tagged with interest in order to be profitable. As long as the bum or whomever is out of debt did not go through bankruptcy to do so they have better earning potential
speaking generally of course..
The probability of someone watching you is proportional to the stupidity of your action.
On June 23 2012 23:58 Highcard wrote:
that was always something I thought about when in school and say people begging for money. But it's not about present, it's about future earning potential. That bum has zero
future outlooks are speculative - they are not facts. imo the bum or whomever is out of debt has more future earning potential as he has no debt to pay off first. When I define future earning potential, I do not look through the lens of going in debt tagged with interest in order to be profitable. As long as the bum or whomever is out of debt did not go through bankruptcy to do so they have better earning potential
speaking generally of course..
What does amount of debt have anything to do with earning potential? No doubt the bum's networth is going to be higher than the recent graduate for a few years but in terms of earning potential, you would expect the graduate to be able to get a job earning more than the bum could and to also have their wage go up. Don't think that's gonna happen for the bum. Doesnt matter if you don't like the way the graduate is going about it, chances are that their earning potential is going to be quite a bit higher esp as time goes on.
In a few years time the both the earnings and the net worth of the graduate should be higher than the bum's.
By being a beggar, the bum is generally guaranteed to not be able to build any networth because he is too busy trying to survive day to day. Whereas generally speaking, someone working at a decent job should be able to get out of debt and then start building their networth, especially if they are frugal and manage their career well. I do get that the economic conditions are pretty shit atm tho for trying to get jobs.
Personally I'm happy that I got a student loan and that I have a decent paying job now reducing my loan and building up assets compared to being a bum on the street with a networth of $10 for life.
In New Zealand, the government actually gives money to jobless people and there are actually quite a few who don't work and just stay at home all day. The amount for someone at 26 is 1120 NZD per month gross and this would be all that person could ever make if they chose to just take the benefit money. I imagine that they would have little debt and assets.
Contrast with my case where I got 40k in student loan debt and started at 3750 NZD a month gross. I'm now up to 6250 per month gross after 5 years and I think I still have potential to go higher. My student loan is now down to about 20 something thousand as well and I have been saving up. Heck, I think my networth might have actually reached 0 wee
Again, I much prefer my situation, esp in my country I guess.
On June 24 2012 15:39 Achoo wrote:
Best way is to buy real estate and inject a lot of cash into your credit in the hope that your estate will go up in value in 5-10 years
yes true, real assets are the answer
but for clarity, what exactly do u mean by injecting lots of cash into ur credit? r u meaning upgrading ur home/real estate/asset or meaning something else? if something else, example plz?
Putting efforts, that is renovations you can do yourself or at a cheap price, add value to your real estate: It is not worth mentionning since it's obvious but some quick embelishments can make your property a lot more valuable (sometimes removing a wall or making your home trendy will bring a positive return). You should consider what are the expectations of a potential buyer (distance from closest city or industrial sites, accessibility, etc ...). Things to consider mainly is how your neighbourhood is going to develop in the future (infrastructures like highways, trains, industrial projects, etc), the more people to come, the more value added to the real estate in your location. "Injecting a lot of cash" means making down payments yearly on your loan b/c the first years you pay mainly interests, thus by doing so you'll greatly reduce the net loss on the long run, ask your banker you can usually pay up to 10% without penalties and make 1 or two "double" monthly payments on top. It's very important to do so at the beginning.
On June 24 2012 01:32 spets1 wrote:
its not really zero it account for inflation which adds up
yeeah - but in that case it's actually just "real" zero. meaning that the lender doesn't gain anything on the loan - but due to it keeping up with inflation he doesn't lose either, which he'd do otherwise
au contraire, either way the lender does gain. Especially if we agree that more times than not the proprietary "lender" in the world is the banks
nonon - I'm just talking about the zero-interest loans, that keep up with inflation... The interest rate being subsidized by the government makes it so that the lender doesn't gain.
As has been mentioned - you could take these free-interest student loans and invest them in higher yielding products and make a solid profit.
Mig hefur alltaf langað til að vitna í sjálfan mig - Ég sjálfur
On June 24 2012 00:57 R_I wrote:
Like Highcard said, there's good debt and bad debt, or +ev debt and -ev debt if you like
Student loans nowadays are probably -ev debt in the long run with the crappy job market. We're lucky in NZ that we have 0% interest on our student loans wee
this is not true, debt in itself is bad. There is only good or bad expectations
big diff
The probability of someone watching you is proportional to the stupidity of your action.
On June 24 2012 22:30 R_I wrote:
What does amount of debt have anything to do with earning potential?
Well before having an actual earning, a debt must be paid. You can not have a real earning potential unless you either
a) lie to urself
or
b) have come out of the negative
On June 24 2012 22:30 R_I wrote:
No doubt the bum's networth is going to be higher than the recent graduate for a few years but in terms of earning potential, you would expect the graduate to be able to get a job earning more than the bum could and to also have their wage go up. Don't think that's gonna happen for the bum. Doesnt matter if you don't like the way the graduate is going about it, chances are ...
I believe you are seeing what you want to see when it fits. You have concluded that all bums or people asking for help/donation have 0 earning potential. At the same time you are apparently expecting to see someone who is in debt not only paying off their debt but also getting a good job.
I disagree with these general assumptions. All I have to do is place myself in a bums shoes or a person in debts. Obviously for me, I would rather be the bum with no debt and then snap out of it and do what I want to do with no constraint(s) holding me down. I wonder if this made sense...
On June 24 2012 22:30 R_I wrote: ...that their earning potential is going to be quite a bit higher esp as time goes on.
If this was the case, student debt in the USA would not have recently climbed over one trill
On June 24 2012 22:30 R_I wrote:
By being a beggar, the bum is generally guaranteed to not be able to build any networth because he is too busy trying to survive day to day.
As I see more and more people who are becoming broke or in debt, this assumption becomes less and less true for my own general conclusion pertaining to people & debt. People who are 'bums' or have no money but won't go in debt, learn to become quite frugal which actually helps somewhere if they snap out of the funk or get over it is whatever ails them
On June 24 2012 22:30 R_I wrote:
Personally I'm happy that I got a student loan and that I have a decent paying job now reducing my loan and building up assets compared to being a bum on the street with a networth of $10 for life.
I am glad for you and how you managed yourself wisely. You should realize how special you are as generally most people do not have the same outcome as you have
The probability of someone watching you is proportional to the stupidity of your action.
On June 24 2012 22:30 R_I wrote:
What does amount of debt have anything to do with earning potential?
Well before having an actual earning, a debt must be paid. You can not have a real earning potential unless you either
a) lie to urself
or
b) have come out of the negative
I think we should make a clear distinction between building and having a positive networth and earning money. Earning money is when you exchange your time and effort for currency. If a person has more earning potential it means that they have the potential to be a in position where they get more money in exchange for their time.
Even if you have 1 million in debt, the moment you spend an hour doing some work and receive $10 for your time, you have just earnt $10. You are then free to do what you like with it, including building your networth.
I've seen you pull out the dictionary and circle definitions in your latest posts so you are welcome to do so with the word "earn".
On June 24 2012 22:30 R_I wrote:
No doubt the bum's networth is going to be higher than the recent graduate for a few years but in terms of earning potential, you would expect the graduate to be able to get a job earning more than the bum could and to also have their wage go up. Don't think that's gonna happen for the bum. Doesnt matter if you don't like the way the graduate is going about it, chances are ...
I believe you are seeing what you want to see when it fits. You have concluded that all bums or people asking for help/donation have 0 earning potential. At the same time you are apparently expecting to see someone who is in debt not only paying off their debt but also getting a good job.
I disagree with these general assumptions. All I have to do is place myself in a bums shoes or a person in debts. Obviously for me, I would rather be the bum with no debt and then snap out of it and do what I want to do with no constraint(s) holding me down. I wonder if this made sense...
Well, I would say it's quite a bit of an assumption to assume the bum can just snap out of it and start making decent money, especially if they avoid going in debt for education.
On June 24 2012 22:30 R_I wrote: ...that their earning potential is going to be quite a bit higher esp as time goes on.
If this was the case, student debt in the USA would not have recently climbed over one trill
Again, i think there's a distinction between networth and earning potential/money. If say people earnt more but are neglecting to pay down their debt and are instead buying status symbols, that would still explain the student debt climbing up even if people are earning lots of money. The economy needs people to spend money on stuff like new cars and houses.
On June 24 2012 22:30 R_I wrote:
By being a beggar, the bum is generally guaranteed to not be able to build any networth because he is too busy trying to survive day to day.
As I see more and more people who are becoming broke or in debt, this assumption becomes less and less true for my own general conclusion pertaining to people & debt. People who are 'bums' or have no money but won't go in debt, learn to become quite frugal which actually helps somewhere if they snap out of the funk or get over it is whatever ails them
Again with the assumption that bums just snap out of it and start building significant networth without taking on debt.
My whole point has been that over say 20 years, you have a lot better expected networth by taking on student loan debt and then getting a good paying job than if you're someone with no qualifications making near the minimum wage.
Maybe you could run some numbers for the discussion? You can pick numbers that you think are conservative and then calculate what the networths are looking in like 10 or 20 years time for the graduate and the bum in your graphic. Pick numbers for things like starting pay, average wage increases and the minimum wage. Also costs too if you like. I'd be happy to do the same but I'll let you pick what you think are reasonable numbers first.
On June 24 2012 22:30 R_I wrote:
Personally I'm happy that I got a student loan and that I have a decent paying job now reducing my loan and building up assets compared to being a bum on the street with a networth of $10 for life.
I am glad for you and how you managed yourself wisely. You should realize how special you are as generally most people do not have the same outcome as you have
As poker players, we learn not to focus on outcome but on the expected value of actions right?
Here's a summary of my claim: In terms of building networth over the working life of a person (20 to 65), the expectation is a lot higher if they go into debt for education compared to not doing so. This is a comparison where factors like self management are equal. This is also discounting some huge overhaul of the current system. The old saying of playing your hand the best you can, even if it's shitty.
If you disagree, run some numbers and let's see. One outside case is someone forgoing education but starting a business but hey, they would need to go into a lot of debt as well.
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Korea (South). Jun 24 2012 00:53. Posts 6817
nonetheless loans are massively ev- except a few ones. I avoid them like the plague, never had one except on a house that I sold.
