Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

You Must Understand These Two Cardinal Rules of Debt

Personal_Finance / Debt & Loans Mar 29, 2015 - 02:31 PM GMT

By: Investment_U

Personal_Finance

Andrew Snyder writes: It’s a tough subject. Nobody wants to admit they spent years of their lives - and thousands upon thousands of dollars - in an effort that may quite easily turn out to be detrimental to their financial well-being.

On Friday, I spoke to a small church group about what it takes to build lasting, liberating wealth. It was the second time we met and I knew going into the evening that it wouldn’t be easy.


I learned during our first session that the majority of the folks I was talking to were swimming in student debt.

They weren’t looking for riches... they simply want some breathing room.

There is no doubt student debt is a quiet yet dangerous headwind for the American economy. Students are graduating from school with huge piles of debt and job prospects that can barely afford them groceries, let alone allow them to tackle a stack of loans.

One young couple I talked with has six figures’ worth of debt and a couple of great-sounding degrees on the wall... yet only the wife has been able to find full-time work in the two years since graduating.

There are plenty of folks responsible for this mess.

Uncle Sam certainly deserves a poke in the chest. Washington has caught flak in recent months because it readily admits it’s lost track of the issue. Sure, it backs most of the loans and creates the slippery conduit that allows students to pile on loan after loan with a few clicks of a mouse... but it can tell us virtually nothing about delinquency rates or who is eligible for loan relief.

In fact, when the Federal Reserve recently went searching for data about the issue, it was forced to go to credit-tracking firm Equifax... not the Department of Education right down the street.

Then, of course, plenty of blame needs to go to our education system that’s more about prestige and connections than actual education.

For example, the University of Pittsburgh is often touted as the most expensive public university in the country. In-state tuition runs a student nearly $17,000 per semester. Meanwhile, students at Bismarck State College pay just over $4,000.

Why the huge gap?

Some would say the value of the diplomas (the “resume value”) from each school is different. But it’s hard to argue the actual education is all that different. It’s not as if the expensive schools have access to better textbooks.

The difference in price is largely a function of a greater perceived value. That’s a major problem America must tackle.

Finally, I suppose, we need to blame the students for simply not knowing any better.

It’s hard to blame an ambitious young student for getting sucked into the vague and glitzy promise of higher education, but most college borrowers break a cardinal rule of debt.

That’s what I focused on with the church group. No matter the circumstance, no matter the promise, the rules of debt are the same.

They are incredibly powerful... and they’re simple.

In fact, there are only two rules. Abide by them and you’ll never have to worry about being smothered by debt.

Rule No. 1: Never take on debt that you don’t have the income to pay off.

It sounds simple, right? Yet every day countless students lock in decades’ worth of monthly payments... with little more than a hope and a prayer that they’ll have a job.

Sadly, it’s not just students. Much of the mortgage crisis came thanks to homebuyers with budgets dependent on rising incomes to pay the bills. They took on a loan with no concrete way to pay it back.

One kink in their plans... and it’s hell.

Rule No. 2: Don’t borrow money for assets that don’t produce income or have any chance of appreciation.

This is why I beg readers to understand that mortgages aren’t bad and yet car loans should be despised. It’s also why credit cards should be outlawed.

Sure, we can argue a student loan creates an appreciating asset... your education. But that’s not always the case and the value of an education is slipping by the week.

At this point, I’d rather my kid be a trade-school-educated plumber than a debt-burdened art historian searching for a job.

We argue America is not facing a student loan crisis. Yes, more than a trillion dollars’ worth of debt on an intangible, potentially depreciating asset is surely a problem.

But the real crisis is that most folks don’t understand why this situation is so dangerous and, more importantly, how to protect themselves.

Good investing,

Andrew Snyder

Editorial Director

Source: http://www.investmentu.com/article/detail/44552/two-cardinal-rules-of-debt

http://www.investmentu.com

Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules