This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
My definition of debt seems different than most. I don't consider the purchase of a house as debt as long as i'm able to sell the house and walk away not owing.
Debt is the owing of money than you have assets to cover. Wealth is having more assets than you have debt. In most cases, banks do not loan enough to create debt, they just stake their claim on hard assets like houses and cars.
Credit cards are dangerous because they allow a lifetime of responsibility to be used as collateral to be traded for large levels of debt. This form of debt is generally a big mistake because the purchased products are rarely worth used what they cost new.
As strange as it may sound, buying $20,000 worth of supplies on a credit card is a larger debt than $200,000 worth of real estate.
I can see both the $20,000 and $200,000 as investments with differing rates of return (with proper management.)
Both have interest rates attached so both are similar there.
Not every cc has 18% interest rate - none of mine are over 7.9%, that's close to a mortgage rate. (One of my balances is at 2.9% for the life of it- I wish my mortgage was like that! ) This just to say a cc and mortgage can be very close in what it costs you to use the money.
I am not making a debate/discussion over which is a BETTER investment, that is each persons personal choice and gut feeling.
I am only saying in my minds eye, I can see both the $20K and the $200K as an investment.
If I can borrow (which is the same as buying the money) $20K at 8% interest and turn that stock around at 400% (even 100 or 200%) mark up in a year, I am happy with the cost of doing that business.
Real estate is always a great investment, even the folks at a disadvantage now should end up okay in time (for the folks discovering they now owe more on their houses than they are worth). I wonder how much monopoly money kids will need to pay for our small houses in 20-30 years - haha. Won't seem real.
I don't mind spending to make money, as long as I am not losing money in the process * and that includes covering the cost of what it cost me to use that other money. *
My definition of debt seems different than most. I don't consider the purchase of a house as debt as long as i'm able to sell the house and walk away not owing.
Debt is the owing of money than you have assets to cover. Wealth is having more assets than you have debt. In most cases, banks do not loan enough to create debt, they just stake their claim on hard assets like houses and cars.
Credit cards are dangerous because they allow a lifetime of responsibility to be used as collateral to be traded for large levels of debt. This form of debt is generally a big mistake because the purchased products are rarely worth used what they cost new.
As strange as it may sound, buying $20,000 worth of supplies on a credit card is a larger debt than $200,000 worth of real estate.
fred
Your definition of debt is wrong. If you have the assets ie money to cover you should have paid cash. Banks loan more than enough to create debt...it happens every day. Look at the mortgage problem right now. Debt and investment are two completely different subjects.
You have to spend money to make money in most cases. We started off by spending about £200 and didnt really get anywhere so we took out a loan to get things moving and made double the loan amount back but invested that back in and so didnt pay back the loan but if we hadnt reinvested we wouldnt be making as much as we are now.
so expect to go in to some debt before you come out of it with some money.
Your definition of debt is wrong. If you have the assets ie money to cover you should have paid cash. Banks loan more than enough to create debt...it happens every day. Look at the mortgage problem right now. Debt and investment are two completely different subjects.
The reason the mortgage industry is in crisis is because real estate has performed worse than projected. Most people loosing their houses are backwards in the loan. At the point the real estate is foreclosed, the debt goes with it.
Debt and investment might be different, but the subjects are hopelessly intertwined.
The reason the mortgage industry is in crisis is because real estate has performed worse than projected. Most people loosing their houses are backwards in the loan. At the point the real estate is foreclosed, the debt goes with it.
Debt and investment might be different, but the subjects are hopelessly intertwined.
fred
No sir...the problem is the banks loaned way more money than the credit was worth. The credit being what the folks could actually pay per the economy.
Most people loosing their houses are backwards in the loan.
Exactly, which is why foreclosures are rarely a good deal. Most people who default have refinanced until they just can't do it anymore and owe 30% or so more than the property is worth and the bank wants to recover what is owed.
The real crisis is the credit card industry. There is billions in credit card debt that the credit card companies consider high risk.
What do you think the widespread impact on the ecomony would be should that high risk debt go bad? Do you think it would be possible the cc co's would call in the other card holders debt to cover the losses of defaulters?
What do you think the widespread impact on the ecomony would be should that high risk debt go bad? Do you think it would be possible the cc co's would call in the other card holders debt to cover the losses of defaulters?
The widespread impact is probably higher interest rates for everyone. Look at the insurance companies. Premiums should be based on risk assessment, but they are not. One billion dollar loss, say a hurricane in FL, and everyone in Idaho is paying more for insurance to cover that loss.
Would they call in existing debt? I don't think they can. If they did, I'm not sure how far they would get. I'll bet 75% of the population who is carrying a balance can only make minimum payments.
I have no idea what would happen if the CC companies started going belly up. My guess is that that would make such a dramatic economic impact that the government would feed them money and we'd never know about it. The government wants us to trust the economy so we'll spend money and CC companies folding publicly does not exactly instill trust. That's the problem right now. People don't trust the economy so they aren't spending money.
That is a very interesting and thought provoking way of looking at it Ross. I think you are absolutely right about the government trying to "protect" the image of the economy by any means neccesary. The only trouble with that is the government is in debt up to its eyeballs as well right now.
I suspect 2008 is going to drag many in the West into the sharp end of debt, given the dot-com bubble of the 90s was transfered into a housing bubble, which many believe the correction will come this year, fo 20-40%.
Which is a good thing. House prices are currently wildly inflated, the market has cut off its feet, and the sooner house prices are slashed by a third the better.
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For every post I aim for 3 or 4 typos per line
The only trouble with that is the government is in debt up to its eyeballs as well right now.
And they always will be. It's a "do as I say, not as I do" mentality. What is amazing is they don't seem to understand that the American taxpayers pay their bills. They are, or at least they were, offering tax incentives for US businesses to source labor overseas and to this day, they hand out H1B work visas like candy. Every job that goes overseas is another taxpayer not paying taxes. A lot of people who used to be in high paid tech jobs are now working close to minimum wage to pay the bills. We make less, we pay less tax, the government goes further into debt.
Re: Debt - Should you expect it, or fear it? 
) This just to say a cc and mortgage can be very close in what it costs you to use the money. 
