Encouraging others' debts?

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Mr. Mordecai
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Encouraging others' debts?

Postby Mr. Mordecai » Wed Jun 22, 2011 5:44 am

The first thing I ever heard about Dave Ramsey is that he is very christian. Before having read any of his books I had the misconception that he was against debt of any kind for personal/religious reasons. I really mean any debt. "Neither a borrower nor a lender be."

Once I started reading his books I found out that my impressions were likely false. Still, it got me thinking. I dislike debt with a passion. I want to avoid it at all possible costs. Yet, I own bonds. I've also donated to Kiva in the past and I've dabbled a bit with Lending Club.

I came to the conclusion after a while that it is impractical to completely avoid supporting debt. After all, you wouldn't even be able to have a bank account (since deposits are used by the bank to issue loans).

I still can't help but wonder at times, though: If we hate debt, why would we support other people taking it on?

bpgui
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Re: Encouraging others' debts?

Postby bpgui » Wed Jun 22, 2011 11:44 am

Just some thoughts off of the top of my head. I have't had the time to seriously ponder the implications, yet

Because businesses need financing to startup and/or continue to operate without massive layoffs during slow periods

Because very few people would ever save enough to own a home let alone own a property for others to rent.

Because governments couldn't operate during slow economic times which generate less taxes (yeah governments could technically have an emergency fund, but that's a pipe dream)

I'm sure I'll come up with some additional thoughts

kombat
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Re: Encouraging others' debts?

Postby kombat » Wed Jun 22, 2011 5:37 pm

I'm not conflicted about this at all. I'm against debt for me. I don't really care one bit if others want to take on debt, until I'm asked (or forced) to bail them out.

I don't eat junky food or smoke tobacco, but I own stock in companies that peddle those things, because they're very profitable.

Investments are not the place to make ethical statements. They're a place to make money. That's why so-called "ethical funds" are nonsense.

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Re: Encouraging others' debts?

Postby NoBoB » Wed Jun 22, 2011 8:42 pm

Ramsey and his ilk treat debt like an AA sponsor treats a bottle of Jack Daniels, when in reality, anything not used in moderation can be bad. Used correctly, though, and there can be benefits.

Mr. Mordecai
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Re: Encouraging others' debts?

Postby Mr. Mordecai » Thu Jun 23, 2011 5:55 am

kombat wrote:I don't eat junky food or smoke tobacco, but I own stock in companies that peddle those things, because they're very profitable.

Personally, there are some companies I'd have a very hard time holding a direct interest in. Payday lenders are one example. I'd have a hard time knowing that my money is being used to support those who prey on the weak.

In the interest of honesty, though, I don't actually hold any individual stocks. Everything I have is in mutual funds. For all I know there are companies in the mix that would bother me. I haven't taken the time to identify and learn about every single holding they have.

Mr. Mordecai
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Re: Encouraging others' debts?

Postby Mr. Mordecai » Thu Jun 23, 2011 6:02 am

bpgui wrote:Because very few people would ever save enough to own a home let alone own a property for others to rent.

Myself included. I think I've mentioned it before, but the only debt I have (or have ever had) is my mortgage. My wife and I talk about how nice it would have been to not have it, but we still took the loan.

So I suppose the argument is basically along the "good debt vs bad debt" lines?

Just as food for thought, it's really Kiva that makes me think about this the most. I find the concept of micro-lending fascinating, but at the same time, I have to wonder if more developed countries aren't just exporting their own bad habits.

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Re: Encouraging others' debts?

Postby stannius » Thu Jun 23, 2011 10:52 am

Mr. Mordecai wrote:So I suppose the argument is basically along the "good debt vs bad debt" lines?


Less "good vs. bad debt", but rather "moderation in all things." Too little debt can be bad (though unlike too much debt, the downside is limited.)

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Re: Encouraging others' debts?

Postby Mr. Mordecai » Fri Jun 24, 2011 5:31 am

stannius wrote:Too little debt can be bad (though unlike too much debt, the downside is limited.)

How so? I know that people sometimes cite possibilities of taking loans in order to reach gains that exceed the interest (trading on margin, etc). Is that what you had in mind? Or something else?

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Re: Encouraging others' debts?

Postby stannius » Fri Jun 24, 2011 10:09 am

Mr. Mordecai wrote:
stannius wrote:Too little debt can be bad (though unlike too much debt, the downside is limited.)

How so? I know that people sometimes cite possibilities of taking loans in order to reach gains that exceed the interest (trading on margin, etc). Is that what you had in mind? Or something else?


I don't mean to say "you should have some debt" (like in the way that a little sleep debt helps you fall asleep faster.) Just that a complete aversion to debt can be limiting.

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Re: Encouraging others' debts?

Postby DoingHomework » Fri Jun 24, 2011 8:15 pm

kombat wrote:Investments are not the place to make ethical statements. They're a place to make money. That's why so-called "ethical funds" are nonsense.


I agree 100%

I don't smoke but think others should be allowed to if they want and are a suitable number of miles from me.

But I also refuse to own tobacco company stock no matter how profitable they are.

It's really about personal choice.

I for one would never own stock in or patronize a business that I knew promoted a specific religion. That's another personal choice.

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Re: Encouraging others' debts?

Postby DoingHomework » Fri Jun 24, 2011 8:22 pm

Mr. Mordecai wrote:The first thing I ever heard about Dave Ramsey is that he is very christian. Before having read any of his books I had the misconception that he was against debt of any kind for personal/religious reasons. I really mean any debt. "Neither a borrower nor a lender be."


You must have thought he was worshiped Shakespeare or Danish princes.

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Re: Encouraging others' debts?

Postby Mr. Mordecai » Mon Jun 27, 2011 8:17 pm

DoingHomework wrote:You must have thought he was worshiped Shakespeare or Danish princes.

Nope. I was aware that was a Shakespeare quote. I thought it was from Merchant of Venice, though, not Hamlet, which is where it really comes from.

In any case, I just thought it was a simpler way to convey the sentiment than to quote Leviticus 25:35-37, for example.

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Re: Encouraging others' debts?

Postby partgypsy1 » Fri Jul 01, 2011 8:48 am

I think Dave Ramsey's hard line against debt doesn't have anything to do with Christianity per se. Then he would be maybe against tithes which I see as church's borrowing money from their members (to help the Church's long term goals. God does not need money). His target audience are people who have a problem with debt. So he is like the AA sponsor who is saying "debt is bad" just like if you are saying to an alcoholic even 1 drink is bad.

Objectively, some debt is not bad. It may allow people to buy a home while interest rates are low, and end up with a house 30 years down the line they own. It allows businesses to invest. While you can argue that the US government has borrowed too much (as well as a certain percentage of the population) in the developing countries there is too "little" debt. That is, people often do not have access to even $50 of borrowing leverage to invest in goods, etc to grow or even make more stable ingo/outgo of their small businesses.

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Re: Encouraging others' debts?

Postby Justus » Wed Jul 06, 2011 7:57 pm

partgypsy1 wrote:Then he would be maybe against tithes which I see as church's borrowing money from their members (to help the Church's long term goals. God does not need money).


When, precisely, does the Church pay back the money to the members?

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Re: Encouraging others' debts?

Postby DoingHomework » Wed Jul 06, 2011 8:35 pm

Justus wrote:
partgypsy1 wrote:Then he would be maybe against tithes which I see as church's borrowing money from their members (to help the Church's long term goals. God does not need money).


When, precisely, does the Church pay back the money to the members?


While you could correctly infer from my comments on other topics recently, that I am not the slightest bit religious, I thing the analogy partygypsy made is fairly accurate. Religion/church fulfills a spiritual need for many people (any perhaps something more for others). I don't really see anything wrong with looking at money given to a church as borrowing again future spiritual fulfillment the church provides. It's not that much different than paying dues to a club where you get benefits later (which might be intangible).


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