Did you vote today? I'm sporting my "I voted Touchscreen!" sticker.
I noticed that there were several propositions that involve selling bonds in order to finance a particular initiative (cleaning up schools or making them safer, environmental research, and the like) and got to thinking... putting aside whether the causes themselves are valid or not, it seemed that the proposal for several of the propositions was to basically go into debt in order to fund the cause .
When, if ever, is it worthwhile to go into debt in order to meet a goal or a need? On the one hand, sometimes you do need to borrow to meet an immediate need. Sometimes, the end is perceived to be worthwhile enough to go into debt for (such as buying a house).
What about on a more personal level? How much can I "borrow" against what I know to be my own finite level of personal resources (energy, time, mental cycles) without being too adversely affected? What types of things should I extend myself in?
6 comments:
it is especially hard to weigh when the benefits achieved by incurring the debt cannot readily be measured in tangible monetary terms. oh well, the ballots are in, and it looks like most of the bond measures passed. wait and see i suppose.
At least one similar principle apply between going into debt on a government level and going into personal debt. In both cases, it's more okay to go into debt to buy infrastructure (highways and houses) than it is to fund your daily living expenses. On the other hand, the Bible warns against debt (Prov. 22:26-27), at least personal debt.
-Anthony
a) Buy housing
b) Leverage to do more of a)
c) When the cost of the borrowing is free / lower than the cost of your lending money to others (e.g. to banks). i.e. you can still gain an overall positive return on your investments wherever they go.
Then again what do I know? I suck at the investing. And am also incredibly risk-averse.
Also Shakespeare said something similar (to the tune of "Neither a lender nor a borrower be ...")
i thought the bond measures were horrible tho! we have to pay back almost DOUBLE what we get...that sure it some awful rate...on the other hand, state bonds might not be a bad personal investment (that is, of course, if CA will be able to pay it back in 30 yrs!!!!!)
Here's my opinion:
good debt--money you borrow in order to allow you to grow faster in the future.
emergency debt--money you borrow or else the debt collectors will drag you to a dark place and beat you.
bad debt--money you borrow so that you can buy something to soothe yourself for being so much in debt.
rule of thumb--if your total debt exceeds 30% of your revenue, beware. That's laughable now, because just about every new home owner in the Bay Area is carrying about 50%.
P.S. In general, I don't like the government carrying so much debt. Can we live with less?! You bet!
Post a Comment