Update of "Debt"

Many hyperlinks are disabled.
Use anonymous login to enable hyperlinks.


Artifact ID: 2587e7a304a211ff69b5489b974f3eba1e489b1131710aaa486f840fd989ec48
Page Name:Debt
Date: 2021-04-12 18:34:42
Original User: zie
Next 2398d535ec6789d350f4c5617ff6ac623e3504b0eb72abfa030e300ee5b90b3a

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: