I agree that leverage is good because it allows you to do more than you could otherwise.
I just have trouble understanding the reasoning that buying an overpriced house is a good thing because one would otherwise spend the money on frivolous things. If the cost of renting is lower than that of buying, you could rent, and buy frivolous things and still be better off than one who bought at the high prices and doesn’t have the money to spend on pleasure consumption. In the end, you may not have more money, but at least, you’d have more pleasure.
gold_dredger_phd, It is sad to say, but most Americans don’t have just one credit card….they have two, three, twelve of them. With high limits on all. Some of these people keep moving balances from one zero percent card to another, but still racking up more debt and digging the hole deeper. They free up a card by moving the balance or getting a HELOC, then run the cards back up to the limit. My sister got a credit card, immediatedly took it up to the limit. Now, since she really couldn’t afford the loan she gave herself, she pays down the card a little bit, then when there is a tiny bit of credit limit, she takes it right back up. So, she is constantly paying interest on the full amount of the card. It is crazy. I’d bail her out, but then I am just an enabler, and she would just do it again. I read all sorts of articles on this crazy spending. I think we are going to have a whole lot of destitute Americans in the future, living in their Hummers.
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