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TM875 · 02-07-2005, 09:03 PM

Well, looking at it from a trained economist's perspective (yes, I was one of those really lonely kids that majored in economics):

There is both good debt and bad debt. Good debt is what you're going into for large capital durable goods. This would be buying a car, getting a mortgage, buying land, or anything else tangible that will last over time. Most likely, you will find a positive return out of this debt - even if it is simply a return on utility (for example, a car. Yes, it will go down in value, but the utility that you gain from it more than makes up for the loss in selling price).

Bad debt is credit card debt that you fall into for no substantial reason. DO NOT hold this kind of debt - there is a negative return with no real positive outcome.

That being said - I will never skimp on my car. I don't mind buying used, but I couldn't give a monkey's crap about the gas mileage or repair costs. If it's the automobile that I want, it's what I'm going to buy. Insurance - well, I'm used to paying a lot for that. My insurance was close to $400 a MONTH until I turned 23 - even then it only went down by a small amount.

Food, on the other hand, is easily substitued or forgone. Perhaps I'm the opposite of Squishor - but food doesn't matter to me. If I'm eating soup and lettuce for a week straight, then so be it - it doesn't matter to me in the least. Food is just a means to an end for me - I eat because I have to.

Anyway, I digress. To be truly economically sound, the consumer must balance both savings and spending. Without both, the economy will crumble. Everyone cannot be frugal, or else the system as a whole would fall apart (we need people to spend, and spend a lot) - so don't be afraid to buy that special "i-need-to-have-it" purchase, but make sure that it's within your means, and that it's only a special time thing. Maybe once a month, once every two months, or something like that. If everyone would just spend within thier means, the whole problem of debt would just not exist.

02-07-2005, 09:03 PM	#9 (permalink)
TM875 Addict Location: Amish-land, PA	Well, looking at it from a trained economist's perspective (yes, I was one of those really lonely kids that majored in economics): There is both good debt and bad debt. Good debt is what you're going into for large capital durable goods. This would be buying a car, getting a mortgage, buying land, or anything else tangible that will last over time. Most likely, you will find a positive return out of this debt - even if it is simply a return on utility (for example, a car. Yes, it will go down in value, but the utility that you gain from it more than makes up for the loss in selling price). Bad debt is credit card debt that you fall into for no substantial reason. DO NOT hold this kind of debt - there is a negative return with no real positive outcome. That being said - I will never skimp on my car. I don't mind buying used, but I couldn't give a monkey's crap about the gas mileage or repair costs. If it's the automobile that I want, it's what I'm going to buy. Insurance - well, I'm used to paying a lot for that. My insurance was close to $400 a MONTH until I turned 23 - even then it only went down by a small amount. Food, on the other hand, is easily substitued or forgone. Perhaps I'm the opposite of Squishor - but food doesn't matter to me. If I'm eating soup and lettuce for a week straight, then so be it - it doesn't matter to me in the least. Food is just a means to an end for me - I eat because I have to. Anyway, I digress. To be truly economically sound, the consumer must balance both savings and spending. Without both, the economy will crumble. Everyone cannot be frugal, or else the system as a whole would fall apart (we need people to spend, and spend a lot) - so don't be afraid to buy that special "i-need-to-have-it" purchase, but make sure that it's within your means, and that it's only a special time thing. Maybe once a month, once every two months, or something like that. If everyone would just spend within thier means, the whole problem of debt would just not exist. __________________ "I've made only one mistake in my life. But I made it over and over and over. That was saying 'yes' when I meant 'no'. Forgive me."