It’s time for another roundup of links. My favorite this time goes to Debt Ninja of Punch Debt In The Face because he got raked over the coals by some debt fearing Ramsey worshipers over at Consumerist. He’s in a situation where he has a lot of cash, and a lot of student loan debt, and a $4000 honeymoon to pay for. Basically the commenter think he should give up on the honeymoon stuff and pay off the debt. Whatever.
As a newlywed, and fresh back from a honeymoon from Maui which cost a double digit percentage more than $4000, I have to side with my Ninja buddy. The Sheconomist and I wanted to have a phenomenal and memorable honeymoon in an exotic location. For one thing neither of us had ever done something like that. For another we were about to enter a period of tighter finances. And another we were confident in our ability to meet future obligations.
The main criticism of Ninja was that he has $15k in debt and $22k in cash. Common wisdom is that he should pay off the debt and be happy with the $7k he has left over. For the most part I can’t disagree with common wisdom. Assuming an interest rate of 7% on the debt, he is technically paying the bank 7% each year for the right to have his cash. But from another perspective, he’s paying the bank 7% each year for the right to have liquidity. If he pays off the loan then loses his job, he’s got just 7,000 in savings. But if he doesn’t and then loses his job, he can put the loans on hardship deferral and still have his $22k. What people always miss with debt is there is more than one kind. $15k in credit card debt at 20% is a completely different animal than $15k in student loan debt at 7%. And on top of that interest on student loans is tax deductible. If you’ve got the means and are relatively sure of your ability to meet future obligations, go have some fun.
Here’s the best of the rest I’ve been reading:
- Moolanomy cites an interesting study about people that retire early die younger. Eesh.
- Consumerism Commentary comments on how to handle requests for financial advice. Sometimes you just have to step back and not offer your wisdom.
- Len Penzo does a mostly scientific test of bottled waters vs filtered tap. I drinking unfiltered tap and The Sheconomist drinks filtered tap. Either way we don’t pay for bottled water, which is simply ridiculous.
- Five Cent Nickel dives into what the numbers on your credit card mean. This is great party conversation.
- ManVsDebt talks about the lessons learned in 3 years of marriage. Again, as a newlywed it’s nice to read things like this. Ninja should read it too.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
