Marc Hanes
Marc Hanes
I don't think I am taking such a draconian stance, more so a more *balanced* general use of credit by individuals and companies. I do pay for the majority of my purchases with cash and never use a debit card. I have one credit card only, with a $750 limit. I get my paycheck automatically deposited into my checking account. In practical terms, I don't see this as any different than being paid in cash. No checks issued to me, instant cash access and usability. I am not advocating a return to the antediluvian 1950's. Instead, I merely aver that credit should be used for a specific purpose not for daily ongoing business. I do believe that's a slippery slope to the kind of mess we have today, drunk on "easy money." Err, hungover on easy money.
I recognize Joe's points about borrowing against anticipated future earnings (farmer, multinational, etc.). However, the point should be to eventually *save* enough earnings to break out of that cycle. In simple terms, the farmer saves enough money over a few years to not have to borrow to buy seed to plant in the coming year. That is prudence, long forgotten if not lamented. If you have two bad crops in a row and deplete your savings and have to borrow, adios prudence but that's your tough luck and that's the capitalist contract (I am no fan of unfettered capitalism, me likey fetters). Don't like late stage capitalist society, bring the terrors like honorable people did.
And why hasn't the state of California *saved* enough money from previous tax collections so as to not have to borrow? I think that is a highly reasonable question that no politician has an answer for. Maybe there may be some financial gain on a macro level in spending now, borrowing and repaying later. But I also am a huge fan of "moral hazard" and, as a taxpayer, would rather have governmental outlays delayed until the money is actually in hand. I realize I am in a distinct minority here.
I also realize that a sudden conversion to responsible, non-borrowing based government, corporate behavior and personal finances will be a very painful shock to the body economic. But I think it is also worth it for a host of intangible reasons not strictly quantifiable. Me in minority #2. Tweaking is just delaying when the system itself is rotten. But, hey, let's just print more money that usually works. Usually.
While I'm on a buttered roll, yes, you should wait however many years it takes for you to acquire at least a 20% down payment. If that day never comes while you rent, sucks for you. I'm not saying you pay 100% in cash, no one would advocate that. Just the "traditional" 20%. To PROVE you can afford the house, now and likely going forward. It is perverse to think that in America home ownership is taken to be a right and not something earned. Or not.
I am 41 years old, have never owned a home and anticipate I never will. Because I cannot afford one. Simple as that. And no great crime to me. Oaky Chardonnay is a crime.