[quote=FlyerInHi]NSR, if your income growths, your debt can grow along. You’re increasing your standard of living by taking on a larger mortgage and buying a bigger house.
Your mortgage is savings to someone else. Higher debt means higher savings which means more overall wealth.[/quote]
The budget isn’t debt. And collectively, mortgages are a zero sum game, they don’t create networrth. The interest on that mortgage isn’t networrth either, it’s a transference of your income to my income thru access to my networrth whether you chose a house or consumed anything else (payday loan). I can then spend that income and thus consume it or retain it (save) creating a .net worth.
I’m talking budget, the annual expenditures. Not the debt to income levels. It’s cash flows. When living off your assets, when you start to exceed 4% expenditure rates, you very quickly deplete the asset base unless investment growth goes perfectly.
Effectively, you eat the seed corn when your expenditures grow. Or like having too large a mortgage, you cripple yourself with debt payment. Again commodity fetishism, or in our case consumerism.
