Attention: HOLD ONTO YOUR DEBT!

[ItDoesNotStopWithRonPaul]

As long as its good debt. Pay off the high-interest stuff like credit cards, but lower interest car loans are good to have, IMHO, since inflation is at an all time high (officially), and is probably actually between 8% and 15%. The .75% emergency FED rate cut is only going to increase inflation.

Think about it, if the dollar drops precipitously in value, then so does your loan, AS LONG AS YOU HAVE SOMETHING THAT WILL MAINTAIN ITS VALUE LIKE GOLD AND SILVER.

This is how you GET RICH folks! Gold and Silver are only going to head higher in the intermediate (1-3 years) term and long term (3+ years), short term is too volatile to predict. Say I have 10 ounces of gold, now worth $9,000. Inflation sets in and gold goes to $1000 or even much higher. All I have done is maintained my assets in REAL TERMS, but in NOMINAL TERMS, that is, in $$$ terms I have more money. If gold doubled, I could sell half my gold, pay off debts, and still have half my gold as a store of real value.

Don't go ahead and pay off your lower-interest loans if you have the cash to do so. Get in to gold and silver, ride it out for a while, and then pay off your loans after you have made money on precious metals. The key is to not worry about short term price projections, just buy in on a regular basis.

 

[Fox McCloud]

don't be greedy; pay of your debt ASAP; trust me, you don't want the government or bank holding ANYTHING above your head.

 

[[email protected]]

Pay off all of your debts as quickly as you can. Don't buy stuff you can't afford.

 

[Kade]

don't be greedy; pay of your debt ASAP; trust me, you don't want the government or bank holding ANYTHING above your head.

Exactly. Smack down these idiots.

If you are going to have debt, buy some other man's foreclosure property. If you have a well paying job, buy land. The prices are sunk.

 

[ItDoesNotStopWithRonPaul]

Pay off all of your debts as quickly as you can. Don't buy stuff you can't afford.

Sure, DON'T buy stuff you can't afford. But if you have, for example, a car loan for a car you NEED, not some fancy car you DON'T NEED, and the rate is like 7.5%, with inflation at over 8%, you can do better buying gold and silver with your cash and then paying off your loans when gold and silver has gone up.

 

[jnpg]

You know what I wish like hell.
That every time I put into my 401K and Roth IRA that I would have bought gold. Damn I would be sitting pretty right about now. Stupid stock market!

 

[S3eker]

He's right about high inflation diluting debt. But it's more complicated than just holding on to debt. Also, most credit cards have are not truely locked to the interest rate. Some have an option to boost the rate up to 21%+ if certain economic factors exist (read the fine print). Now your home loan is debt that would be diluted which is good for people. Most of us can't just pay off our houses tomorrow.

Pay off those cards ASAP - I recommend using your $1600 against debt and not Ron Paul if you have credit cards. I think RP would want you to do this. We need to take care of each other during these times.

 

[ItDoesNotStopWithRonPaul]

He's right about high inflation diluting debt. But it's more complicated than just holding on to debt. Also, most credit cards have are not truely locked to the interest rate. Some have an option to boost the rate up to 21%+ if certain economic factors exist (read the fine print). Now your home loan is debt that would be diluted which is good for people. Most of us can't just pay off our houses tomorrow.

Pay off those cards ASAP - I recommend using your $1600 against debt and not Ron Paul if you have credit cards. I think RP would want you to do this. We need to take care of each other during these times.

YES, forgot to clarify that this is only for FIXED interest. Credit cards should be the first debt to be paid off.

I agree. I will probably put 75% towards debt/buying gold and 25% towards Ron Paul.

 

[WilliamC]

It all depends on the level of risk you are willing to accept.

To me debt = risk, since I cannot predict the future and cannot "know" that I will always have a job and be able to meet my payments.

I prefer to be debt-free (well still working on the mortgage but currently only making an extra two principle payments a year, really would like to make a double payment every month) and scrimp and save out of current cash flow for investments.

Unfortunately for the past few months much of my cash flow has been "invested" in a certain political campaign...

 

[jonahtrainer]

don't be greedy; pay of your debt ASAP; trust me, you don't want the government or bank holding ANYTHING above your head.

Good point.

If you are going to have debt make sure it is non-recourse OR hold gold/silver bullion in allocated storage equal to the value of the debt.

When the EURO was introduced debts in Francs, Marks, etc. were automatically converted into EUROS. What if the Dollar is converted into a gold backed currency and your debts are automatically converted by law? Talk about being in bondage .... because you'll be competing with the cheap labor from China/India so you're wage will be low while at the same time owing a huge amount of gold ounces. Could be very ugly situation and in contradiction with the Impair Obligations of Contracts clause of the Constitution; but we obviously don't obey that anymore.

 

[Time for Change]

Now your home loan is debt that would be diluted which is good for people. Most of us can't just pay off our houses tomorrow.

Pardon my ignorance, but...
By diluted...what is the effect? What do you mean?
The FRN's you have to give toward that debt remain the same, so what is the advantage?
The payment does not go DOWN.
Your interest rate may be lower than the inflated rate, but there is really no tangible benefit to all this that I can see.
Cost of goods goes up, eating up more liquid assets, leaving less cash around after paying the mortgage that remains the same.

That said, what am I missing here?


Another note:
Isn't buying gold now, while prices are so high only benefiting those selling it?
There is serious risk here...judging by what I see.
Someone buys it at the high price...the fed does some trickery, and the price drops...you lose...but the guy that sold it to you is laughing all the way to the bank.

Please provide some insight...
Can anyone explain how this is responsible investing?

 

[Dark_Horse_Rider]

Got to agree about being debt free. We have for too long been persuaded to live beyond our means.

 

[Fox McCloud]

Got to agree about being debt free. We have for too long been persuaded to live beyond our means.

"as long as we continue to live beyond our means, we're destined to live beneath our means" -Ron Paul

 

[spudea]

Yeah but rates will go back up eventually, so take advantage of the low rates as soon as possible.

 

[WilliamC]

Pardon my ignorance, but...
By diluted...what is the effect? What do you mean?
The FRN's you have to give toward that debt remain the same, so what is the advantage?
The payment does not go DOWN.
Your interest rate may be lower than the inflated rate, but there is really no tangible benefit to all this that I can see.
Cost of goods goes up, eating up more liquid assets, leaving less cash around after paying the mortgage that remains the same.

That said, what am I missing here?

The assumption to the "hold good debt" strategy is that your income will either stay the same or increase as inflation increases. If you make more dollars-per-hour in the future then the fixed rate debt you hold is easier to pay off.

I don't like this assumption personally.

 

[spudea]

pay off what you can. Rates won't stay low forever.

 

[dsentell]

You know what I wish like hell.
That every time I put into my 401K and Roth IRA that I would have bought gold. Damn I would be sitting pretty right about now. Stupid stock market!

I stopped contributing to my 401K three years ago and have bought gold and silver with that money -- my husband now thinks I am a genius!

But I sure wish I had more . . .

 

[AisA1787]

Before everyone jumps on the "pay off your debt as fast as possible" bandwagon, I'd like to make a point. I more or less agree with the OP.

For the sake of argument, let's assume inflation is 8%. Let's assume you're paying off a $100,000 mortgage at 6% APR. Let's say you have $100,000 sitting in your checking account. Do you pay it off? Psychologically it will certainly make you feel better and more secure, but that $100,000 sitting in "cash" in your checking account at "0% interest" is actually earning 2% APY thanks to inflation.

So as lon as you have extra money, you're better off letting it sit in your checking account earning "0%" because you're actually going to be 2% APY ahead of the inflation curve. If you keep your assets liquid, in "cash," in an emergency-type fund, then I don't see a problem with this, short of a conversion to a new currency like what happened in Europe, or perhaps a deflationary period.

Where am I wrong?

 

[Fox McCloud]

Before everyone jumps on the "pay off your debt as fast as possible" bandwagon, I'd like to make a point. I more or less agree with the OP.

For the sake of argument, let's assume inflation is 8%. Let's assume you're paying off a $100,000 mortgage at 6% APR. Let's say you have $100,000 sitting in your checking account. Do you pay it off? Psychologically it will certainly make you feel better and more secure, but that $100,000 sitting in "cash" in your checking account at "0% interest" is actually earning 2% APY thanks to inflation.

So as lon as you have extra money, you're better off letting it sit in your checking account earning "0%" because you're actually going to be 2% APY ahead of the inflation curve. If you keep your assets liquid, in "cash," in an emergency-type fund, then I don't see a problem with this, short of a conversion to a new currency like what happened in Europe, or perhaps a deflationary period.

Where am I wrong?

there's no guarantee you'll have a job, or source of income in the next few months to a year. That, and we really don't know what the market or the dollar is going to do...if you default on your loan/mortgage; guess what? You're homeless now...not exactly a great position to be in when there's a severe recession or a depression.

 

[AisA1787]

there's no guarantee you'll have a job, or source of income in the next few months to a year. That, and we really don't know what the market or the dollar is going to do...if you default on your loan/mortgage; guess what? You're homeless now...not exactly a great position to be in when there's a severe recession or a depression.

Actually, the fact that you might lose your job seems like a pretty good reason to keep your assets liquid instead of paying down your mortgage faster than necessary.... You will need that money to buy food, pay for medical care, etc., if you lose your job. Why pay off a mortgage faster than necessary when you might lose your job and need that cash for other things, especially when inflation is higher than your mortgage APR?