Author Topic: Debt after disaster  (Read 1881 times)

thead8ev

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Debt after disaster
« on: January 21, 2009, 06:35:00 AM »
Why would you want to reduce your debt in preparation for a disaster?

Offline chris

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Re: Debt after disaster
« Reply #1 on: January 21, 2009, 07:42:56 AM »
Why would you want to reduce your debt in preparation for a disaster?

Why would you NOT want to reduce debt for any reason? If the economy takes a long slow dive, then debt in an anchor weighing you down when you can least afford it.

Offline Stein

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Re: Debt after disaster
« Reply #2 on: January 21, 2009, 09:28:37 AM »
There will always be someone to chase you.  Say you owe Citibank and they go flop.  They will either be propped up by Uncle Sam (who you don't want to owe money to) or allowed to go bankrupt.  During bankruptcy, all of Citi's bondholders will be beating each other with sticks to get the chance to chase you to all ends of the earth to get some of their money back.  When they get tired, they will sell the debt to someone else who will then start up the chase.  Repeat forever (or the statute of limitations assuming they obey the law).

All in all, debt sucks.

GroundPounder

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Re: Debt after disaster
« Reply #3 on: January 21, 2009, 11:09:11 AM »
First you need to define a disaster.  Most of the time a disaster is not going to be a tsunami, earthquake, nuclear bomb, or some other TEOTWAWKI.  You are much more likely to lose a job, be in a car wreck, or have a serious illness.  What about the heater going out in winter and needing major repairs, major car repairs, or the house needs a new roof?  Some might consider those disasters.

A lot about what we talk about in the 'survival community' is the Earth ending stuff, but truly prepared people are ready for anything.  You can not do that with a load of debt holding you down. 

I have been in debt and know what it is like.  I do not own any debt except my home (which I am working to pay off early).  The difference is the feeling of security for my family is amazing.  Much less stress, a better marriage, and a better quality of life.  Sure you can go into debt and get a bunch of cool stuff, but that can only last a short time.  Building real wealth is not done by borrowing money.

I wish you well. 

Offline Trash

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Re: Debt after disaster
« Reply #4 on: January 21, 2009, 03:15:51 PM »
Humorously folks. How about treating debt like the USA does.. Keep piling it on and passing it fwd.
Wouldnt that be fun.

Offline Stein

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Re: Debt after disaster
« Reply #5 on: January 22, 2009, 03:25:46 PM »
Humorously folks. How about treating debt like the USA does.. Keep piling it on and passing it fwd.
Wouldnt that be fun.

Not really!  The difference between you and I and the federal government is that you and I have to pay it back.  Congress can spend and spend and never really have to face the music.

Eventually, the level of debt we are under will flip the ship over.  There are so many triggers: sovereign pullback, interest rate hikes, etc.