Is there a way to responsibly take on some debt and profit from it?

[Bossmanralph]

I'd say it's good if you want to enterprise, and know you have have money coming in later.

 

[Doc Cassidy]

Rental properties are good debt to take on depending on what state you live in. If you're smart about it the rent will be able to more than cover the mortgage, so you're basically getting paid to build equity. If you really hate the idea of dealing with tenants you can hire a property manager for about 8% of the total rent and just sit back collecting a check.

Again, depends on what state you live in. Some states have truly awful tenant rights laws that make property ownership risky.

 

[PandaChai]

Dealing in debt is the domain of the usurer and the scoundrel and no good can come of it. Even considering such a thing is suspect foreskinless behaviour.

 

[Betonhaus]

You're better off buying a big sack of gold and burying it

 

[TheRedChair]

Heh. You know that if you own a US home and have a mortgage that interest you have to pay is tax writable.
This would be a good debt if you are fucking smart not to use all of your equity on your dwelling/commercial properties.

A lot of businesses will do this in one form or another.

As stated before I have some very good accountants so I make sure that I do NOT have to pay my fucking government a pint of blood when tax time comes around.

As stated before you need a good accountant to give you the information on what to do and what not to do.

 

[♦️ King of Diamonds ♦️]

I personally view debt in the exact same way I view firearms and automobiles: Tools- extremely dangerous tools if used irresponsibly, but also necessary for the safety and stability life if used wisely and in a way that can create beautiful things.

There is beauty in using a firearm to hunt and defend one's home from burglars, beauty in using a car to do to and from work and on the occasional joyride, and beauty in using debt for something like a fixed-rate mortgage or even a personal loan for something like moving expenses. However, using a firearm for a school shooting is dangerous and irresponsible, killing someone from a DUI you caused is dangerous and irresponsible, and using a payday loan to go to an anime convention is dangerous and irresponsible.

 

[drfuzzyballs]

You need a credit score for future lines of credit you may need, Ideally have a credit card, use it a little and pay it in full every month just to keep up a good record.

 

[Fried-Rice12]

I would advise you to invest in real estate, but in light of the whole Trump case . . . I would advise you to only invest in a place where you can be sure property rights are actually respected.
AKA not in a judeo-bolshevik controlled city/area.

 

[Betonhaus]

I would advise you to invest in real estate, but in light of the whole Trump case . . . I would advise you to only invest in a place where you can be sure property rights are actually respected.
AKA not in a judeo-bolshevik controlled city/area.

I'm concerned that real estate may become volatile and if things turn south you lose a lot of money.

 

[Fried-Rice12]

I'm concerned that real estate may become volatile and if things turn south you lose a lot of money.

The Canadian real estate market hinges on the flood of shitskins and other assorted garbage that castreau imports. I am uncertain about the US real estates market. chi com real estate market is teetering on the edge of oblivion and held up only by smoke and mirrors from the chi com regime.

 

[Betonhaus]

The Canadian real estate market hinges on the flood of shitskins and other assorted garbage that castreau imports. I am uncertain about the US real estates market. chi com real estate market is teetering on the edge of oblivion and held up only by smoke and mirrors from the chi com regime.

I would imagine that even if American real estate is relatively sound, a crash in Canada and in China would cause prices to drop in America

 

[Kuritan Deplorable]

I'm concerned that real estate may become volatile and if things turn south you lose a lot of money.

Real Estate is always risking volatility, but its fundamental underlying value argument of "Not enough property for endless people" is coming to an end in the era of population decline - We already have no real shortage of undeveloped land, and now developed land is going to become more abundant than the people who want it, and even a liability to an extent. Even disregarding the commercial and office space bomb floating out there in a population decline world, services to a given region of development don't get cheaper to maintain just because less people live in them. If you operate a building in these areas, you're going to be paying out the ass for municipal services just to keep the basics running, even disregarding inevitable government grifting. This'll encourage centralization of people and business towards already more densely occupied regions, and if you're holding the bag on 'abandoned' developments, its not gonna be worth too much more than undeveloped land at that point. If you took out a mortgage based on the improved value of the developed lands (IE the house on it) before this hit, you're gonna be in for a bad time.

This is a 20-30 year time horizon issue, not a next 2-5 years issue, but its an inevitable issue, and everyone knows it, and its just a question on when the biggest holders start to get cold feet and bail out to beat everyone else to the punch. Once that run starts, its gonna be painful if you were in for profit. If you're just living there, then just don't bet on your house selling for eleven million dollars to fund your retirement. And if you're a business, don't buy your developed real estate, rent it and don't get too attached to any physical site.

The only places this doesn't hold true are megacities like NYC or San Fran, but then

I would advise you to invest in real estate, but in light of the whole Trump case . . . I would advise you to only invest in a place where you can be sure property rights are actually respected.

This problem bears its ugly head. When these cities start to see the first damage of insufficient residents in a region to make municipal services affordable, they're going to start seeking pounds of flesh rather than fixing their budgets. If your a business that happens to be in the same region, they're going to come right after your wallet, or worse. And that's just assuming you are otherwise being a good boy and not annoying the powers that be or voting wrong.

And hell, all this doesn't touch on the likely damage to the market when these private equity funds end up having to show their empty pockets, or the crippling of the rental market that also comes with population declines. You'd think that when a boomer dies off, some venture firm is gonna swing in and buy up that property, but that venture firm is gonna be relying on investor money to do so, and that investor money is gone as the boomers cash out and use it all up trying to pay for medical bills, or give it to their kids who want to go to Mali and not invest in the private equity markets. Money and Market disappearing at the same time is a recipe for disaster for a lot of rent seeking organizations.

 

[doodoocaca]

I've been debt free for a long time and saving regularly, normally I wouldnt touch loans because I dont need them. But Ive been thinking lately, If I make a regular income and have the habit and financial security to always pay off any future debts I take on, is there a way I can benefit in some way from this?

It's called a business loan. You need money to make money. But if you do not have a business plan, you're just going to owe interest.

Now, if you have money sitting around, and loan that to someone else, we call that investment. I recommend the S&P500 and some bonds. Look up "boglehead portfolios."

 

[Waifu Denier]

It's called a business loan. You need money to make money. But if you do not have a business plan, you're just going to owe interest.

The more important thing is setting up a separate entity. Taking out a loan by yourself leaves you personally as the one holding the bag if things go south.

 

[doodoocaca]

The more important thing is setting up a separate entity. Taking out a loan by yourself leaves you personally as the one holding the bag if things go south.

Yep, an LLC, and S or C corp, but I forget.

 

[Ughubughughughughughghlug]

Calculate net present value of your investment if you borrow

Calculate net present value of your investment if you have to wait to save the money

Trade off: Borrow and your investment pays out sooner, but you pay interest; save and you don’t pay interest, but you wait longer.

Since money can be reinvested and some projects may terminate by a certain time, there are lots of situations where it borrowing generates a larger profit.

Choose the option that looks better (personal taste for risk and waiting matters)

 

[t28ai875]

Debt purchase - you buy them in bulk and then forgive the legitimate stuff like debts accrued by families who've hit hard times, and then go after business debts, you'd be shocked how many large business owe money that they refuse to pay go after those debts till you get a judgement add costs and if they don't pay sick enforcement on them it's weirdly profitable.

This is legitimately big brained, I would suggest also refinancing the business debts with higher interest to make the most profit off of it. Enforcement is a decent way to force payment, butttt you could also sell the debt to a collections agency and if they have an account with the raised interest, bam, the debt collections can pay the due interest as well, so you have many options with this avenue of business.

 

[JohnnyG]

That makes a lot more sense to me. I don't know how someone can afford to pay taxes on forgiveness of debt when the reason they couldn't repay the debt to begin with is because they didn't have the money to do so.

The reason debt that's written off is taxed as income is that in many cases it's equivalent to actual cash income (money being fungible, and not paying off a debt being a choice), and not taxing that would open up the door to all kinds of kosher schemes.

I could make $100k, "lend" it to you, write it off and claim it as a loss against my income, and now you have a tax-free paycheck (or, I'm gifting you money I otherwise would've owed in taxes). You can imagine the fun this would be at scale.

 

[Major]

take a loan at 6%, put it in to an 8% investment bond fund. Not much difference but more or less free money

 

[Thomas Talus]

The more important thing is setting up a separate entity. Taking out a loan by yourself leaves you personally as the one holding the bag if things go south.

This doesn't always work, as banks may not lend to some types of entities (some will only do so to C corps, not to LLCs), and may also require you to personally guarantee the loan.