Update of "Debt"

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Artifact ID: 2398d535ec6789d350f4c5617ff6ac623e3504b0eb72abfa030e300ee5b90b3a
Page Name:Debt
Date: 2021-04-12 19:05:52
Original User: zie
Parent: 2587e7a304a211ff69b5489b974f3eba1e489b1131710aaa486f840fd989ec48 (diff)
Next 7a544ac59683bbc575c67c2ce51a54242107a12f09541d223667201d7cf0f935

Debt is an interesting tool.

In general debt is bad for you. Debt is mathematically a negative bond. If you own bonds, you should probably sell all of those before taking on debt. All of that said, there are sometimes good deals on debt and occasionally debt isn't a terrible deal.

The math behind debt is pretty easy, for $X of principal, you are charged Y% interest(per year) until all of $X(the principal) is paid off.

Debt is a good deal if you can almost risk-free make more than Y% interest on $X principal. That's not an easy thing to achieve, but it does happen on occasion.

Some situations where debt can make sense: