Credit good or bad?

[vzdude]

If everything goes south, and the smelly brown stuff hits the air circulation device, will it really matter how much debt one has? Especially if you feel you will have to bug out and leave tons of it all behind? Obviously this is assuming it will all happen and if it doesn't you can still pay it all off and/ or make the payments until the bottom falls out........ Thoughts?

 

[TiminMishawaka]

My thoughts are I am running across too many people that are living beyond their means and CREATING a financial SHTF situation for themselves no matter what is going on in the real world. Manage your debt. Invest wisely in your future. Those are survival skills.

 

[NathanJefferson]

You WILL owe someone. Period. Unless its a total collapse WROL, and then you are most likely already dead. Not saying to not prepare for this, but an instance where your debts aren't owned, transferred to or assumed by SOMEONE would be VERY unlikely. Even if TSHTF and all kinds of wide spread panic happen for years, you will owe it, even if it's the government or some other body to come in and just 'acquire' your debt by fiat.

Now the question is - do you go into debt buying preps or other 'stuff' thinking there will be high inflation? No. You don't know if/when high inflation would happen and you need to be able to service that debt.

Is it a good idea to invest, in a leveraged way (Read DEBT), in tangible and wealth producing assets like farm land, rental properties? IMHO Yes, if you can be sure of your ability to service the debt. Especially now with record low interest rates, buying a rental or investment land is a great idea, much better than anything you could put in a 401k...

User debt wisely, use it in a traditional way to increase your wealth knowing that prices always will go up 2-3% a year.

Don't use it thinking there will be a wipe out of your debt by hyperinflation or economic collapse, you WILL lose. If you look at hyperinflation in the past, people don't 'get rich' paying off their debts because their wages don't keep up with the cost of living. Instead of using that 100k you made today to pay off your house you will use it to buy food for your family, almost enough for half of a meal.

 

[Ryano23_98]

silver and gold and Guns and ammo !

 

[TiminMishawaka]

Is it a good idea to invest, in a leveraged way (Read DEBT), in tangible and wealth producing assets like farm land, rental properties? IMHO Yes, if you can be sure of your ability to service the debt. Especially now with record low interest rates, buying a rental or investment land is a great idea, much better than anything you could put in a 401k...

A note on rentals. I ran into a mini-shtf situation in South Bend when I tried buying rentals there. When the job market is crap, it doesn't matter what your rental "would" make - people don't have money to pay it. I'm selling all mine to buy land that produces consumable commodities. I am in a situation where I have work that pays my bills so I don't "need" the rental income and I can afford the time it takes to get something like an orchard going. I like the option of having an investment I can eat if I can't sell it in a SHTF situation. You can't eat gold or tenants.

 

[NathanJefferson]

A note on rentals. I ran into a mini-shtf situation in South Bend when I tried buying rentals there. When the job market is crap, it doesn't matter what your rental "would" make - people don't have money to pay it. I'm selling all mine to buy land that produces consumable commodities. I am in a situation where I have work that pays my bills so I don't "need" the rental income and I can afford the time it takes to get something like an orchard going. I like the option of having an investment I can eat if I can't sell it in a SHTF situation. You can't eat gold or tenants.

Yup. That's why I suggest you should have the ability to cover the payments if you don't have tenants. Normally most people don't do that, but I wouldn't lever up unless I could cover an extended absence of tenants...

 

[vzdude]

Buying preps on credit is a terrible idea, but was just wondering how everyone thought things would transpire after shtf.

 

[RobbyMaQ]

I guess I won't get that lamborghini for my bug out vehicle after all

 

[Indy_Guy_77]

You can't eat...tenants.

Says who?

 

[Electronrider]

The number one all out beats no other prep you can have is to be debt free.
You prep for the most realistic problems first, and a serious economic downturn should be pretty high on anyones list. The odds of death flu, nuclear war, a fast financial meltdown, etc are so much more lower than really bad economy. Plan accordingly.

 

[Baditude]

The number one all out beats no other prep you can have is to be debt free.
You prep for the most realistic problems first, and a serious economic downturn should be pretty high on anyones list. The odds of death flu, nuclear war, a fast financial meltdown, etc are so much more lower than really bad economy. Plan accordingly.

I like what you said here.

what is your view if you have manageable very low interest debt and looking to invest extra income.

 

[dom1104]

I am not aware out of all the SHTF events in history, where the bankers didnt get what you owed them.

So it would have to be one HELL of a SHTF situation.

 

[Txlur]

Fernando Ferfal Aguirre had a lengthy section on this aspect of the Argentinean collapse, and from what I remember, he made a very strong point that people still had to get to some job and work somewhere, making less and still there is the real potential that they would lose their house and have to rent because of debt.

 

[vzdude]

That was another thing I was curious about...... All of my debt is under contract, so the terms shouldn't change, but what if they try? IIRC any debt can be called in at any time..... Then what would you do? What COULD you do?

 

[NathanJefferson]

It's not so much that they can "Call the debt", I think that all mortgages and car loans have that specifically called out as a no-no. Businesses DO have to worry about this pretty often, so if there is a currency crisis expect a lot of businesses to be forced into bankruptcy prematurely.

What you would have to worry about is buying food, gas, medicine as their costs are increasing hugely but your wages don't. People think that they will pay off their mortgage with a days wages, this goes against the lessons learned in every high/hyper inflation I've ever studied. By the time they are making enough to pay it off they have already put everything they own in hock just to put food on the table because they can't afford to eat!

Posted this in another thread earlier, but I really suggest everyone read this:
FOFOA: Deflation or Hyperinflation?

Also, if you haven't watch The Crash Course by Chris Martenson
Look into the Ka-Poom theory over at Itulip and some of the stuff that Daniel Ackerman has out there is decent, but he is always trying to sell stuff.

 

[buckstopshere]

Ima big fan of no debt and working towards that end myself.

However, I'm not convinced that accumulated debt will necessarily follow a total economic collapse of the dollar.

The contract that you've made with credit card companies, mortgages, car loans, etc...is repayment in US dollars. If the dollar no longer exists, the contract would then be null and void unless you sign an amendment most likely agreeing to exchange all of your current dollars for the new amero or whatever.

I'm also not convinced it won't follow you, just things to think about.

Best way to afford the things you need to be ready for a major SHTF event is to not have your capital tied up in debt. That will always be the safest answer.

 

[Electronrider]

I like what you said here.

what is your view if you have manageable very low interest debt and looking to invest extra income.

I am a true beleiver of zero debt. If you wish to manage debt as well as invest, seek a good investment advisor. If you are a prepper, then you have a whole other area to invest in, such as food,water,weapons,gardening/preserving, etc.

I beleive that in a hyper inflation situation, there will be a changing of intrest rates on things like home loans, regardless of contractual law. There are numerous examples out there that show the courts/governmant favor the banks.

My current goals are to be debt free as soon as possible, have 2 years of food and water stored, enough gardening and canning supplies to replace that food. Those 3 things will make a huge difference in my life, almost regardless of what happens to the world.

 

[Johnny C]

Debt free my friends.

Imagine the safety net you could build up and all the preps you could buy with those monthly mortgage $

You also need to have enough cash put back to pay the king's rent or you will still lose your house eventually, even if you do OWN it.

Spouses have to be on board or you will never get there though.

I have a great wife in that respect and we are debt free at the moment. We will be needing a new car here soon though, and we dont have enough ready cash to buy one outright, so it looks like we will be on the hook for a car loan next year. RATS!

The wife isnt willing to drive a junker while we save up the cash. Most women-folk have a huge fear of being stranded in their vehicle.

 

[flatlander]

54, debt free and a few preps along with money in the bank
It took a while but I love the feeling of being able to "walk away" at any time.

Bob

 

[Somemedic]

I guess I won't get that lamborghini for my bug out vehicle after all

You mean THIS? Minus the lambo doors.
Lambo doors are so played out that lambohrginis don't have them anymore ...

http://api.ning.com/files/tIIOb8kbD...bL5*UDhd0oLZZtsgS8m/Lamborghini_LM002_012.jpg