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하나만 더 공개 합니다….
일을 열심히 하는데도, 가난한 이유 3번째….
빚의 세계로 너무 쉽게 들어감….
3
Getting into Debt Too Easily
If money is a religion, debt is a cult.
-Brad KongSlavery from Africa might be over two hundreds years ago. People created a whole new one. In this brilliant system, slaves do not even know they are slaves. It doesn’t even matter if you are a black, white or yellow. If you are poor, financially stupid or both, you just get in. Some people are willing to wait in line for hours to step into debt. Some even show off they get one. Sometimes, I really wonder if these people do not know how to use a calculator; they must not have been in an elementary school to learn basic algebra. They just pay more for the same things with debt, and they are OK with it. They are even proud to pay more since they believe everyone in the world does the same thing.
In my opinion, there is nothing worth trying with debt. Probably you may use debt somehow in your lifetime. That is true for me, too. But, this idea should be the basic principle for life: no debt. Debts have a lot of names: mortgage, car loan, credit card, margin, etc; these are merely other names of house debt, car debt, credit card debt and investment debt. Do not get confused by their fancy names unless you are stupid.
Debt used to be considered a very bad thing. But, for some reasons, it has become a natural part of our life. I have two credit cards myself which I never pay interest for. In fact, I get cash back from both cards every month. And, I had a car loan seven years ago, but that three year term loan was paid off within 6 months.
There is a Korean Internet community I used to go to. People there are crazy: too orthodox, traditional and boring; they had very typical lives including full time jobs, mortgages, car loans, two cars, two children, wife with no job, etc. I do not expect a maverick in any place. But I was amazed how people can live that much traditionally without any twist.
Funny thing is that they try to argue with me while they pay double their house prices with mortgages: it is true that people often make their house costs double with 30 years mortgages; there is nothing wrong with it technically, but I do not think people should argue that it is a better choice.
One of the best things I did with money was buying my condo with full cash. I know it is hard, especially when you live on the East or West Coasts: Typically, the house prices on the East and West Coasts in America are three times more expensive than in the Midwest where I live. In 2010, the mortgage crisis broke in America. A lot of foreclosures and short sales came out on the market and these dropped house prices crazily. At that time, I had lived in a rental apartment for thirteen years. I had about $80,000 my wealthy parents gave me since my daughter was born. I saved all the money in CDs in a bank initially. Price of a one bedroom condo dropped to $60,000 in 2013, so I bought it with full cash immediately.
One advantage when you buy a house with full cash is a discount. The nice Polish owners had two houses and were desperately in need of cash. I got a $5,000 discount immediately when I suggested a cash payment as the original listing price was $65,000.
I used to pay $900 a month for Apt rent in 2013, and one-bedroom rent is about $1,200 a month now in 2022. Now I pay only $350 HOA fee (association fee) a month, so I am saving about $800 a month, which is $10,000 savings a year after deducting about $1,700 property tax. I have lived here for over 9 years now, so probably $90,000 has been saved out of rent. I will save even more if I live longer in this house.
In a Korean web community, I see that a lot of people bought big houses with the hope that their house prices will jump up. Nowadays the single population is increasing fast and less likely they will buy big houses. I do not think big house prices will go up more than inflation, but probably condo prices will increase faster than others as singles buy these more.
People are getting into debt too easily nowadays. I think most people tend to get frugal after being burned with debt a couple of times somehow. Honestly, I used to be a big spender myself.
Now I am living frugally even without having a car. But, when I used to own my business, I had up to $9,000 in credit card debt in 2009; this was mainly business debt, not really from personal consumption, though. My mother saved me once in that year, and I never have the problem again.
The second biggest reason why people cannot quit a very bad job is owing a debt: Mortgage, for example. That is definitely worse than having too many kids, which is the biggest reason I believe. Debt will never bring you profit. I saw some Koreans declared that living in a big house means high quality life; I think they are plainly stupid. In reality, debt can severely lower our quality of life. Please trust me that nothing is more important than peace of mind. We will discuss it more later on.
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