Personal Finance from 10,000 Feet | BeatTheBush

A huge component of personal finance revolves around debt. I’d like to take a broader view of debt in general and go over each kind of debt. I’d like to offer my views of debt and how I think about it in general.

Probably going to pretty this is be push today let’s talk about personal finances this channel is about personal finance afterall i’m going to give you a broader look of all this kind of like from a 10,000 feet point of view you see some kinds of debts are worse than others of course some of them have really high interest rate others have really low interest rate

However my personal view is that i really dislike that even good debt like mortgages i still dislike because in the end when you think about it who uses that is the poor people that uses that because you cannot afford to buy something that’s why you have to borrow money to buy that thing for example i personally could not pay for a college all by myself so i had

To get student loan i could not pay for this place i’m living in so i have to get a mortgage all of these things that you finance no matter if it’s good that bad that you still have to have money coming out of your pocket to service the interest rate on all of these for example for a mortgage let’s say it’s a $200,000 loan 4% interest every single year you have

$8,000 worth of interest coming out of your pocket coming out of all the wages that you earn every single year out of your pocket into the banks now even if you look at the tax advantages a little bit maybe $8,000 is not coming out of your pocket maybe only six thousand is after you do the mortgage rate interest deduction from your taxes so just having a mortgage

Sitting there it represents a little bit of outflow of cash from whatever you bring in you could argue yeah mortgage this is a good debt and maybe actually earns you money however when you think about should you pay it off or not let’s say you have $200,000 to completely pay off this mortgage instead of paying this mortgage off a lot of people would rather take

This and maybe invest it in a new property or maybe they would put it in the stock market instead the way to think about this is if you had the money to pay off the house week but instead you don’t and you go invest it instead thinking that you would make eight percent ten percent per year this is the same thing as going to the bank and go hey can i borrow a few

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Hundred thousand dollars at whatever mortgage interest rate that you’re borrowing let’s say it’s our percent and then you take this money that you borrow from the bank and then you put it in the stock market now when you put it this way a lot of people may not actually do this let’s say you have a place to live all owned and paid for would you actually go to the

Bank and borrow gobles of money just to invest in the stock market but what if let’s say you can borrow $1,000,000 at 4% or maybe 10 million dollars at 4% would you still take this money and go to the stock market and invest all this instead this is an interesting exercise because once you borrow the money from the bank you’re actually racing against time every

Single year you have to make more than that 4% that you’re paying the bank now when you put this restriction on yourself you could lose your pants once in the wall if there’s a market downturn if for example even if the market is flat for one year you make 0% you’re going to be losing 4% and you have to pay the bank stuff let me switch gears a little bit and talk

About all the types of debts there is and what i think about all of them generally i dislike all of them but if you have the cash you really should use the cash to pay for in full instead of financing because all that interest is just going out of your pocket mortgages i just talked about student loans sometimes you can’t help but you have to get a student loan if

You want to go to college car loans is a little bit more affordable because you can actually save up enough within a year or so in order to buy a car of course it’s not going to be a very nice car it’s a usable car and that’s what most people should do personal loans i think most people can avoid as long as they spend below their means they they never get into this

Situation where they don’t have enough emergency funds to fund whatever needs they have credit cards of course i talked about in length and they have roughly an average of 15% apr if you have credit card loans and you let it get out of control it would totally control your life so you really have to pretend this is on fire and like give it your highest priority to

Pay down those credit card loans rent to own types of debt is sort of stupid to me because you are actually paying a lesser amount yet but over the life of the loan you’re likely paying more than a buying the thing brand-new it appeals to people that cannot afford to buy the whole thing full price really if you cannot afford to buy something full price you really

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Should save up for it because if you do you’re going to save yourself i don’t know upwards of 30% off the full list price of the item because when you rent to own you’re paying a premium on top of this 0% financing until maybe two years away from now those are really good at getting people that goes all i don’t have to pay anything oh bye then i’m going to be

That much richer i’m going to have saved up or someone that isn’t a really good saver they think they can save enough they get this zero percent thing they get the product they bring it home and then two years down the line they forget about it and then they suddenly have to pay the way they get you is if you do not pay every single penny by the time is up they

Would charge you the finance fee all the way from the beginning so then suddenly you’re going to get this really hefty penalty that you have to pay pawnshops come on guys pawnshop sounds like it’s for people that are really in dire need suddenly they need to pawn their assets for some money because they don’t have any other money to pay for whatever expense they

Have you get around from needing upon anything by spending responsibly so that you haven’t good emergency fund also if you do plan to pawn anything whatever you pawn they’re likely going to give you a really really low amount for it it’s like pennies on the dollar so it’s much better if you just take that item and just ebay instead if you have the ability to do so

Title loan is a bad idea because you might have a car or something and you want to get a loan and then they’re going to use that as collateral so you’re just kind of risking your asset right there if you’re unable to pay they’re going to take whatever asset it is and likely make a lot more off of you then if you just paid back the loan so they would prefer that you

Default it and get your asset instead really that consolidation is generally good if you’re able to consolidate and pay it off rather than in the reverse because you consolidate it and suddenly your payments are lowered and you go oh great i don’t have to pay as much and then you just end up spending more so it could go either way payday loan is kind of like the

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Most despised thing ever like i wish they just do not have this ability at all because they generally charge you like $15 per 100 dollars that you borrow which is pretty heavy this is not 15% over the entire year this is 15% in just two weeks so by the time you work out all the math is really a four hundred percent apr this is a lot higher than even credit card

So this is kind of like toxic lava and it’s burning i don’t know it’s like acid basically you should not touches it’s like getting money from a loanshark almost so there you have it those are my views on debt and i really hate it and i personally am trying to get rid of them as fast as i can including my mortgage as well personally i do not have any other debts

That i mentioned except a mortgage i like to always think and remind others that whenever you pay down your mortgage is like a guaranteed certificate of deposit the amount you earn does not come out in cash the amount of you earn comes out in net worths at the end so let’s say you pay $1,000 extra in your mortgage and it’s a 4% you get at the end of that year a

4% reduction in the amount that comes out of your pocket so it’s the same thing as a 4% cd except you do not see cash in your savings account instead you see your net worth increase instead it’s a little bit different way of thinking about it but you really should think about your net worth rather than trying to get your bank account to grow more and more i hope

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Personal Finance from 10,000 Feet | BeatTheBush By BeatTheBush

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