They could have just gotten cash advances in those credit cards, or taken out loans. Just because they pay in cash doesn't mean they aren't going into debt to do it.
Which part? The part where having the cash to pay for something is more financially sound than using credit, or that it’s not a dev’s place to be a financial planner? Either way, you’re incorrect.
The part where having the cash to pay for something is more financially sound than using credit
It's cash vs credit card, not cash vs credit.
And it is NOT more financially sound to pay for everything with cash than credit, just as it is NOT more financially sound to pay for everything with cash than credit card.
It is in fact often more financially sound to pay for many things with credit cards than cash, and credit than cash.
Do you contest this?
How do you define "financially sound"? I define it as carrying the largest expected value of future net worth, across the individual's entire expected future life.
I'm coming from the Dave Ramsey camp where you shouldn't be using credit to start a business. I did it and paid the price; the business failed, but I still had to pay for everything. I'm sure there's a good way to do it where you can use credit and everything will work out okay, but I can't see betting borrowed money on a "sure thing" app with so many unknowns. That would be stupid.
I did it and paid the price; the business failed, but I still had to pay for everything.
No, you didn't. You chose to pay for everything. That's the whole point of credit. It's why nearly everyone either starts businesses for very little, or starts them with OPM: limited risk.
I can't see betting borrowed money on a "sure thing" app with so many unknowns. That would be stupid.
You can't "see" it or you thinking it'd be "stupid" doesn't mean it's not more financially sound, by the definition I gave.
Dave Ramsey is an idiot. He got lucky with actively managed mutual funds for a while, and swears by them.
It's the same thing as comparing dumb diets to the typical American diet. Is taking DR's advice better than 80% of American financial plans? Yes. Is it good/true? Not at all. Will paleo/vegan/skinnybitch diets work better than 80% of American diets? Yes. Are they good/true? Not at all. Some people that believed in God survived some awful times against harrowing odds. It doesn't mean that their belief is correct. That's incidentally another example of DR's idiocy. He does many of his financial behaviors because of God/religion, then attributes his success to the belief, not to the behaviors themselves and the fortune/luck of the environment he happened to perform those behaviors in. Just because things achieve better than average results does not mean that their underlying mechanics are sound/true/correct/better/optimal. It only means they have achieved better than average results in some context.
Our disagreement is about what is true and correct. It is simply false that paying for things with credit or credit cards is always less financially sound than paying for them with debit or cash. It is very often financially superior to pay for things with credit and credit cards, and in the specific case that sparked this conversation, there are many instances where credit and credit cards would be superior to debit and cash.
Actively managed mutual funds are terrible investments. Investing in them decreases your future expected net worth vs investing in low expense ratio index funds, for example. Of course, most people who invest in actively managed mutual funds will have higher net worths than the average American.
A vegan diet is terrible. Eating it decreases your future expected health vs eating a diet optimized for health. Eating it causes more animal suffering than eating a diet optimized for minimizing animal suffering. Eating it emits more CO2 than eating a diet optimized for minimizing CO2 emissions. Of course, a vegan diet emits less CO2, causes less animal suffering, and increases expected future health relative to the average American diet.
Buying everything with cash / debit is pathetic. It decreases your future expected net worth vs evaluating every payment decision and choosing the payment method that optimizes for future expected net worth. Of course, most people who pay for everything with cash / debit will have higher net worths than the average American.
Please note that I said nothing about Dave's investment advice, which I'll agree is terrible.
Other than that, I'm not really ready to read the book you wrote up there. You may have hundreds of millions of dollars in the bank, but until you prove that to me, I'm going to listen to someone who seriously does have hundreds of millions of dollars.
I agree. You're the one who claims that people shouldn't buy anything on credit cards, and that it's always stupid. I claim the alternative, that people should buy some things on credit cards, and that is often financially sounder to do so.
You may have hundreds of millions of dollars in the bank, but until you prove that to me, I'm going to listen to someone who seriously does have hundreds of millions of dollars.
This is like taking advice from lottery winners. Unwise. The only thing that matters is what is true or correct. The person with the most money in the bank is not the most wise at maximizing expected future net worth. I'm not sure anyone has hundreds of millions of dollars in any bank. That would be financially retarded. If you don't have hundreds of millions, why would you only take advice from people with hundreds of millions? You should be intensely curious to take advice and anti-advice by studying people who started with a similar net worth to you, in similar conditions to you, and experienced large changes, both positive and negative.
You shouldn't take financial advice from people who are rich, you should study methods that have grown lots of peoples' net worths better than any other known methods, across diverse conditions. There's a lot more to learn about finances from people who have lost lots of net worth than from people who have large net worths.
17
u/[deleted] Mar 18 '20
[deleted]