this post was submitted on 12 Apr 2024
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Debt comes with interest. If you don't have to pay interest it's free money.
It's only free money if you invest it in a way that allows you to make a return on it. If someone hands you an interest free loan and you blow it on an expensive car that actually goes down in value the second you take it off the lot, you're losing money. That said in the right circumstances debt is an extremely useful tool. But he's probably mostly talking to the people who don't know how to use it that way.
An interest free loan is something you take 10 out of 10 times…the reason is simple: even in the worst of times you can accrue more than 0% interest on money.
Right now, with current interest rates, if you could get an interest-free million dollar loan, you’d essentially be able to make $50k a year out of it by just sticking it in an online savings account.
Even if they demanded that you pay all of the money back in a month, you should still take it, because you’d be netted the interest you could get out of the money in the month, and then return all of the money back to them.
Anyone saying they wouldn’t take an interest-free million dollar loan is a complete moron.
I'm well aware that that's true if you're financially responsible and educated in investment. I don't think his advice is aimed at that group of people. Also in the real world people don't hand out 0% interest loans without strings very often?
Educated in investment? Even a regular savings account will net you some return on a million dollars.
You can also be financially irresponsible in every other aspect of your life and just plunk the million dollars into a savings account and take the free money.
Of course, it's a hypothetical which is why it makes his answer as stupid as it is. He's too absolute on debt and that makes him a clown, and that's coming from someone like myself who paid off a mortgage with a ~4% interest rate in 3 years.
They used to for cars, but obviously that's a depreciating asset or w/e so it's not really the same thing.
Yeah that's the definition of strings attached. If they're giving you a 0% interest loan on a car, you can assume the profit margin on the sale is large enough to cover the interest, especially since car companies often own the finance companies.
It's not free money. It's still debt, as you have to pay it back.
Then put it in TBills or a high yield savings account. The money will still be there when you need to pay and you'll have made interest on it the whole time.