[Finance] Debt or No?

MadScientist · Heavy Crude Joined: May 19, 2004 Posts: 286

Another archive, feel free to post!

I miss old Mad Scientist, wonder if he's still lurking around?

Pops

------Original Post--------------

Max credit cards or get debt free?

Which would be better-
To go into the next few years with low overhead and little debt.

Or, to buy all the stuff you need on credit and wait for the economic crash.

Im not much of a gambler...so debt free has been my strategy. However Im starting to think that having tangible goods in store might be worth the risk....

OilBurner · Heavy Crude Joined: Jun 03, 2004 Posts: 417 Location: UK

I also say keep debt free the best you can.

Maxing out on credit cards is merely wallowing in the consumerisim that has got us all into this mess.
Better to be restrained - at least then any simplification in lifestyle won't be such a big change?

However, depending on how fast and far society may fall - it may be worth buying as much mid-term carry over supplies and tools before the economic system completely melts down.
I'm talking about axes, hand drills, hand saws, water containers, etc. These things may not last, and they may get stolen but they could certainly come in hand during a transition period.
In any case though, you could buy all these things now without getting into debt - so why risk it?

EDIT: Also meant to say, if at any point you feel the only way is down and you go credit card crazy, aren't you going to feel silly if things sorted themselves out (at least for a while)!! Smile

Pops · Posted: Fri Jun 04, 2004 8:04 am Post subject:

I have to agree on debt free. It will take a while, if ever, before things unwind to a point the Haves don’t have legal control over the Indentured.

But if you have ANY discretionary income, I would certainly invest in quality tools, books, alt. energy/transport TODAY before inflation takes hold, the cost of EVERYTHING skyrockets and interest rates increase.

To show you I am serious, I am selling my little 1-acre & 100 yr. old farm house in the beautiful central valley of California, and moving to Tornado Alley because I can buy 30 fairly good acres there free and clear. If nothing happens for 30 years I’ll have a nice retirement place to putter.
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smiley · Fission Joined: Apr 16, 2004 Posts: 2104 Location: Europe

I would stay debt free. I don't think that society will collapse over the next 50 years.

However I wouldn't be surprised if we will see a period of hyperinflation. I think we have already entered a period of strong inflation. Since the leading indicators (CPI) have been rigged by the Bush administration it doesn't show up in the official statistics, but one look at the prices tells you otherwise. The loose fiscal and monetary policy of the Fed will only worsen things.

Strong inflation renders your savings worthless. If you had money to spare, I would invest in a commodity which has an intrinsic value. That way you're protected from inflation. I think gold is overvalued as a commodity. Platina is much too volatile.

Copper, silver, nickel and lead are very good investments. They are relatively stable and undervalued at the moment. Besides they are very important materials for alternative (electrical) energy sources and appliances.

JLK · Posted: Fri Jun 04, 2004 8:30 am Post subject:

No one really knows what is going to happen in the future. The best we can do is preserve as many options as possible. Be nimble. This means not being burdened with consumer debt, or a big mortgage, or big car payments on the SUV that you will not be able to afford to drive anymore anyway.

Preferably, you should have a nice nest egg saved up. And while we are talking about that, do not have it all invested in the same thing. Do not have it all denominated in US dollars, for example. Buy some gold. Keep some in foreign currencies. Buy some land that you could live off of if you really needed to.
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notacornucopian · Posted: Fri Jun 04, 2004 10:10 am Post subject:

Personally, I am working on the debt free scenario, mainly because my career is in the construction industry. I fully expect that in 10 to 12 years, I will be out of work with little chance of finding work in the industry - at least at the salary I currently earn. If I had chosen a career path that was more stable, I may not be pursuing the debt free scenario in quite the same way. I am the only income earner in our family of four so I expect that we will be facing some economic hardships in the near future. My preferred course would be to sell our " 5 minutes away from Calgary " acreage and move to one of the smaller communities outside of Calgary. More of a temporary move - maybe a mobile home in the town where my kids go to school - buy a small piece of land somewhere more remote and build a " earthship " or something similar. At this point I cannot think too far ahead as no one else in the immediate or extended family has gotten a hold of what this is all about. My side of the family are all either dead or a long way away and my wife's side of the family have never been that good with facing the truth in the first place. This is not going to be fun.

MattSavinar · Elite Joined: May 09, 2004 Posts: 1990

I say get debt-free.

I don't know that "debtors prison" will become a reality per se, but I can imagine something along those lines.

A situation where those in debt who cannot pay off those debts are forced to work cleaning buses, etc. . .

This is something the average middle class or upper middle class American has trouble imagining. "Surely, they wouldn't force me to do quasi-slave labor to pay off my credit card, would they?"

Well, in San Francisco, for instance - if you want to get General Assistance, aka "welfare" - that is exactly what you have to do. It is a full time job!

Keep in mind, our prison population has grown by a staggering 800% in the last 30 years. Most of that is the result of the war on drugs. What you need to understand is the prison industry is a massive, massive, money maker.

So back to debtors prison or "debtors forced labor" - we already have something similiar to it in our welfare system. It also offers the perfect market solution to the problem of people who can't pay their debts. The legislators will rationalize it this way:

1. The person gets a chance to pay off their debts.
2. The companies in the work program get cheap, domestic labor!

You can bet the prison lobby and the credit card lobby will support "debtor-work programs" whole-heartedly.

Matt
http://www.lifeaftertheoilcrash.net

MadScientist · Heavy Crude Joined: May 19, 2004 Posts: 286

hehe, since everyone said "debt free" Ill present the counter argument:

Say I go out and charge $10,000 of goods on my various 0% interest credit cards tomorrow. Not vacations to hawaii or plasma tvs. We're talking bulk foodstores, barterable items like cigs, coffee, tp., .22 shells, some solar panels maybe.

So Im carrying 10K in debt and have a pile of goods. Oil goes to $182 a barrel. Inflated cost of living sets in. At this point: The 10k I spent in 2004 now would only buy about 5k ( thats a wild guess) of goods. The pile of goods I bought in 2004 are now worth much more. If it gets bad enough where Im selling or giving out homemade bread then Im rich.

It's an investment risk. A risk I consider in many ways less than investing in oil futures or even precious metals. The goods you are buying are directly tradable to the people you meet walkin down the street. Total market failure only helps your position.
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OilBurner · Heavy Crude Joined: Jun 03, 2004 Posts: 417 Location: UK

That's an interesting argument. I especially like the idea of buying cigarettes, there's not a smoker in the world that wouldn't sell their granny to get hold of cigarettes when that craving kicks in.
The problem is, how long would some of these supplies really last? If they're spoiled then they're worthless regardless of the want or need for them? For instance, old tobbaco isn't so great.
You're also going to have to defend these stores with your life. Not sure I fancy that myself!!

WaterBearer · Posted: Fri Jun 11, 2004 9:48 am Post subject:

Plus, you know, there are plenty of us who just cannot possibly get themselves out of debt by the time PO changes our way of life. We owe too much already to be able to pay it back without a good twenty plus years to work it off.

MadScientist · Heavy Crude Joined: May 19, 2004 Posts: 286

right Water,

I think "Striving to be debt-free" is more appropriate.

If they ever do have debtor's prison it will just be called America, cause almost all of us will be in it. Does anyone know the real number for % of Americans in debt? Its probably sickening. I found "28% of americans make getting out of debt their top new years resolution". Thats about 100 million people. The same article had another disturbing quote "“A lot of people are dangerously close to the edge and any minor setback could push them over,” Amelia Warren Tyagi, coauthor of The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, told reporters. She also disclosed a fact that graphically demonstrates the dimensions of the crisis: nearly one third of bankruptcy filers owed an entire year’s salary on their credit cards."

hmm minor setback...what could that ever be? O x O
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"The future power is manpower"

notacornucopian · Posted: Fri Jun 11, 2004 10:08 am Post subject:

I am planning to the debt free route if possible. I am still waiting for my copy of " The Oil Factor " to use as a guide to protect what I have in the interim while our banking system still exists.

Speaking of banks, does anyone have a prediction as to what will happen to financial instituions should the economy crash rather than contract slowly ? What will the banks do with all those houses they have foreclosed when there are no buyers ?

Pops · Posted: Fri Jun 11, 2004 10:20 am Post subject:

Just from personl experience, I could smoke a 10 yr old cig! lol
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JLK · Posted: Fri Jun 11, 2004 10:34 am Post subject:

An interesting analogy to the question under consideration in this thread is should the government try to get its budget under control before Peak Oil sets in, or should it do what it has been doing and continue to run up a massive national debt.

My suspicion is that the neocons know that the day of reckoning is coming and are determined to suck the system dry now for their own benefit since the walls will come crashing down eventually anyway.
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The truth that is suppressed by friends is the readiest weapon of the enemy.
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Here in the 'Commonwealth' we have a program wherin Senior Citizens can 'work-off' their property tax debt doing selected tasks at the town hall. At $6.50/hr as I remember. Keep in mind property taxes here in my nearby town run around $15/thousand and they have a cap on 'senior-slave' earnings around $800.