The Debt to Income ratio, a critical indicator for your personal financial health
Today I learned something new. The latest statistic in the United States was edifying in what it revealed.
$1.4 trillion in college loan debt
The latest number for the amount of college loan debt that exists in the United States is $1.4 trillion. This debt prevents many Americans from saving, from investing, from becoming true and full participants in capitalism. Is it a big surprise that on college campuses throughout the United States we are seeing a rise and embrace of socialism, of even hard core communism?
I'm sure some bloggers on Steemit are anarcho-communists and while I do not consider myself in any way a communist I will reserve that debate for another time. The point I am making is that the more in debt, the less able to participate the students and college graduates are, the more attractive socialism, communism, and other Marxist style theories will become. The Zeitgeist may even favor an anti-capitalist approach at least by a sizeable portion of millennials.
Why cryptocurrency is essential to the survival of capitalism
While I cannot pretend to know what the future holds I can say that cryptocurrency fills a need, a desire, particularly in millennials, and most specifically in male millennials. It led me to an interesting conclusion and hypothesis which I will post more about later but the gist of it is that the young males in society have been disempowered, excluded from the benefits of capitalism, and cryptocurrency was the right idea at precisely the right time. For right or wrong, masculinity has been classically defined by, or associated with a desire to feel in control of one's own destiny. This sense of being in control has been systematically stripped from most young males in society, and now in the crypto-world there is property to own, a sense of being in control, a feeling of power, which likely attracts a lot of males. This may at least in part explain why crypto is a high percentage male, but this of course may not be the only reason.
What about the debt to income ratio?
The signal for being financially healthy is to have a very low debt to income ratio. The current trend in society pushes credit (spending money we don't have), and this creates debt (owing money). My argument from research while not a financial advisor, is that a low debt to income ratio is better. I don't like using credit, or credit cards, particularly because I acquired college debt and understand there is no value in owing money. In fact, it's better to be in the position of the lender than of the borrower in my opinion. The reason? The lender has a lower debt to income ratio.
I still do not prefer the idea of buying a house vs renting. If I rent then I can gain more experiences per dollar than if I own. What I mean is I can rent nice places all over the planet and keep maximum mobility. I can experience more of the planet, more variety of people, and even possibly live in nicer homes, by renting than if I own one home. This of course doesn't make sense for everyone which is why a financial advisor should be the person you discuss this with but if the goal is maximum quality experiences per dollar and you do not have a family reason to settle in a specific location then why not? At the same time if you do choose to own a home you do not have to live in it to legally hold ownership, and you can rent that home, condo, or apartment, while you live where ever is best for you at the time.
We all have a sense that more income and less debt are both good things. But what's the ideal ratio between income and debt?
It really depends on your goals. For me I do not like a lot of debt. 1% of my net worth or less would be ideal for me. Of course it's not yet that way, I do owe college loan debt.
I don't believe in getting a mortgage or taking out a business loan. If I don't have it then I don't deserve because I haven't really earned it. Borrowing based on what I might earn is risky because what happens if I can't earn it somehow?
I know what it's like to owe much more than I'm able to earn. I've had the ratio so bad that I owed more than x10 what I earned for the year. It's a shorter lifespan if you're under the kind of stress debt brings and the worse the ratio the greater the stress is.
If you have large debts, it's likely that you'll be suffering from stress and my debt is large :)
Public education systems are failing to educate thoroughly or adequately on basic financial literacy.
Who is to blame when students go into deep debt to get useless degrees?
Probably the parents, who never taught the value of money and left the youngster to find out those facts the hard way.
The degrees aren't even useless though. It's more just having a degree doesn't mean you'll make a lot of money. You can be a total genius and broke.
Haha, it's gets tricky in my country, India too. Idiots are millionaires/billionaires here. They just join politics and gobble all the public funds. ;) Or just pass the civil services exam... So, it's like work whenever you want and have more money than the greatest business leader would dream. All of it minus any 'work'!
Then some inherit a tonne of money too. Sometimes it just helps to just flow with the tide and enjoy your work instead of thinking too much.
It is like that anywhere to be honest.
Haha, true. It is just more conspicuous in third world countries.
I come from a third world country and we grew up looking with awe an uncle who would be having a 'good life' in the west. Now as a man moving to middle age and having lived in the west for many years have realized it's not roses all the way there.
Thanks you very much for sharing your insights. :)
What's even more scary about that $1.4 trillion in student debt is that most of that debt is guaranteed by the U.S. government and much of it is going to default. When it does, the U.S. government will have to stand behind its guarantee. That will future blow the budget deficit and add to the national debt, along with the recent federal tax cut, the budget deal that will result in more defense and domestic spending, and the end of sequestration. The U.S. debt to GDP ratio will start to approach that of some the PIIGS countries in Europe.
It's definitely better to have a low debt to income ratio. Unfortunately, many people in the U.S. can barely get by and have to resort to debt to even pay essential living expenses.
I personally own a house and am very happy with the decision, as it has allowed me to build equity and enjoy the appreciation in the value of the house, which I will cash in when I sell it. I can, however, see your point of view. What makes sense for one person doesn't necessarily make sense for someone else in different circumstances.
Nice topic I agree with you
And on the other hand if you want
To take a debt
Pick it up from one of your friends or relatives
Do not take it from the banks because it will exhaust you
The best idea is saving
Debt can create massive problems for businesses and individuals, staying debt-free is the best way to avoid insolvency =)
Good educational information should be shared so your post has been Upvoted and Resteemed. Hope more people get to read your blog.
I agree with you that the college debt might be the cause for a lot of young people in America's college campuses to support Marxism ideology. But this doesn't excuse them of their huge mistake, since if they lived in a country ruled by that ideology, their live will certainly be much much worse.
Cryptocurrencies are indeed critical for the survival of liberty (which is the same as saying capitalism, since liberty cannot exists without free market capitalism), by taking the power away from government, and make it more decentralized.
I don't know if the reason for crypto to be populated by a male majority is the sense of control, I think it simple is because males tend to adopt more risky adventures, and also tend to get more involved in new technology.
People do not understand that it would be much worse because they don't get the benefits of capitalism. Cryptocurrency gives young people their first taste of the actual benefits of capitalism to show why it is superior to communism.
If all you got from capitalism is debt, living in your parents basement, maxed out credit cards, then of course you might look at communists and socialists where people get to go to school for free, get healthcare for free, and seem to have it good.
Except all of those free stuff are only in fantasy land. Nothing is actually free.
for me a blend of socialism mixed with capitalism is ideal. looking at it deeply, Socialism the chinese style has even become a good model to follow. china is even advancing the course of globalization and USA through is now going anti globalization which is an irony of monumental proportions. More so, USA which is purported to be a model of capitalism runs so many socialist system in its food stamps and social policies. As such for me the best model is a blend of both, capitalism enmeshed in socialism...For students, more of socialism. Do you know most Americans traveled to Sweden/Germany to Study as they offer quality and mainly free tuition which is better than studying under imense debt. great post as always @dana-edwards
Also because not many females are into the technology stuff, it's a shame really...
That's why i don't want any credit cards, i prefer to spend the money i have than the money i dont have plus a little more to the bank.
I liked the part that you talked about buying a home to rent but not living in it, to keep up the mobility.
I think the only house i would ever buy is a farm, and that's mainly because it's like a dream of mine to own a farm and have some animals, that's why i'm studying veterinary medicine.
I really liked your post, it's my last upvote of the day, my VP is already way to down, it's not much but here it goes.
Females are into technology but males like to be in positions of power and to own stuff. That is what I mean. Females might like to be in positions of power and own stuff too but I think males are raised in a way where it can become part of the masculine identity.
True true, i always like to own stuff, don't know if it's because of the way i was raised or if it is because of testosterone... i want to own the world xD
Females are into technology, but from what i've seen the percentage of males is much higher than the females, while females are more into the biology aspect of science, i see it in my university, vet medicine is full of females, while engineering degrees are full of males, ofc there are always 10-15 students of the other sex on ea class.
But i understand what you are talking about.
Thanks for answering @dana-edwards :)
There have been socialistic undercurrents in academia for decades now, that's what has helped create the free-speech-free zones on college campuses where you're only allowed to speak, if your speech isn't offensive to anyone.
And the central banks have intentionally punished the savers and rewarded borrowers with artificially low interest rates. They've even gone so far as to generate negative interest rates in some countries in an attempt to move the trillions of dollars they newly created currencies out of savings and into the markets.
I've heard the situation (I believe quite accurately) likened to heroin addiction.
The pusher (in this case of easy money) gives you the first few tastes for free. Once you're hooked, you're easily manipulated.
Authoritarian socialism, how is that any different from the Stalinism of the past? And we rebel against those bankers and their anti saver policies around here. That is why in crypto we don't like cryptocurrencies without limited supply.
Coin supply should be the first thing anyone looks at when evaluating a new coin, i.e. is there a limit to how many coins will ever be in existence?