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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (319820)	1/9/2007 9:56:12 PM
From: bentway	Read Replies (1) \| Respond to of 1573925

"A house is worth $100K. Taking out a 30 year mortgage results in a total payout for principle and interest of $150K." $100k at a 7% fixed rate over 30 years: =============================================================== Your Final Summary: * Monthly Payment: 665.30 * Total Interest (No pre-payment): 139508.90 * Average interest each month: 387.52 * Total amount paid over the time period: $239,508.90 adviceonline.co.uk

To: tejek who wrote (319820)	1/11/2007 1:50:17 PM
From: TimF	Read Replies (1) \| Respond to of 1573925

A house is worth $100K. Taking out a 30 year mortgage results in a total payout for principle and interest of $150K. That's $50K more than the house was worth at the time of purchase. In that way, debt is negative. The fact that you pay more doesn't mean debt is negative. Few people can buy a house without going into debt. If they didn't take on the debt the debt they wouldn't have had the house. To a lesser degree the same thing is true with a car. A car normally isn't an appreciating asset like a house often is, but you still gain a lot of benefit from having the car. I suppose you could get a cheaper used car but some people might have to go in to debt to get a used car. Debt is a always a negative in the sense I've already mentioned . Debt has to be paid back, usually with interest. Its better not to have the debt that have the debt, if you consider it strictly in isolation. But as I've also pointed out the debt doesnt' exist in isolation. Borrowing gives you funds you can use. Having debt plus thus funds (or debt plus what you buy with those funds) can be better, even a lot better, then having neither. (It can also be worse, but I'm only arguing against the idea that debt is ALWAYS a negative, not that it is sometimes negative.) But taking on debt can be a good idea, even a very good one in certain circumstances. How? Because interest rates are low? "Borrowing money is cheap"? It would still be better to pay entirely with cash. What if you don't have the cash? Or what if you have cash but using it + debt gives you a better net result? Buying a cheap car with debt might allow you to commute to a better job. Buying a house with debt gives you a place to live and may give you a good return on investment (I certainly profited from doing so). Companies may invest using debt to avoid dilution or to avoid loss of control. Sure if you can just conjure up whatever amount of money you need it would be better then going in to debt, but in the real world debt is a valuable tool if used wisely. Of course if its used foolishly it can get you in a lot of trouble, but remember your claiming its always bad.