Homesteading Today - Why do most people not understand the debt can be good?

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Originally Posted by bare

since it seems that every credit card company is lining up to loan me their money at zero interest for up to 18 months. The most I might have to pay is a 3% transaction fee but many of them even forgo that.

I like using other peoples money!

The 0% offers, especially with no fee have been drying up a bit but it's been good while it's lasted. I have it in the bank earning 5% for me. Everything's set up on auto-pay. No risk involved. I don't consider it debt per se because I can pay it back in an instant if I needed to. It's free money for something that took less than an hour to put together. I've built my combined limits to low 6 figures so utilization doesn't hurt my scores. If you're a disciplined person, credit can be a great tool. The banks have those 0% offers because they know most people aren't disciplined and will carry the balance past the expiration of the offer after spending it on consumer goods/living above their means.

I'm also getting about $800/year in cash-back and rewards points the past couple of years from cards. I haven't paid a penny in interest on credit cards and the only "debt" I carry on them is sitting in the bank making money for me.

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Originally Posted by Matthew Lindsay
Example lets say you buy 10,000 dollars worth of stock on margin, Year 1 you pay interest on 10,000 @ 7% and you earned 10% therefore you made $300. Year two same senario but now you are starting with 10,300, you still only pay 700 in interest

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No, you do not pay $700 in interest the second year! Typically interest is paid on the principal and for every payment you make the principal decreases. So during the second year you will be paying less in interest than you did during the first year. And so on and so on.

As someone who has purchased stocks on margin, I can say that you're both incorrect. If you haven't sold any stock, you'll pay $700 in interest in year 1 and $749 in Interest in year two. The interest will indeed compound.