Paying down loans in HyperInflated Economy

[Coronita]

I’ve been asking myself the same question these days.

I’ve got a pretty hefty mortgage right now. Until recently, II started out making the initial loan payments on a 30year fiexed, maybe made 1 extra principle every 6 months…I was hoping to hold more onto cash in some areas, waiting for interests rate to kick in, and for it to eventually beat my mortgage rate….Well, it hasn’t happened…So then I started to make the standard payment per month on my 30 year fixed, plus roughtly an extra principle payment of about the same amount. I figured it was one way to finish paying off the loan in 15 years versus 30… However right now, I’m considering reverting back to the minimum payment.

I guess my concern, is the way the economy is going….I’m thinking of going to conserve as much cash as I can, less the recession turns into a depression, and which one of us or both of us loses our jobs.

Unfortunately, I have about 60% left on my principle balance and I have only been in this loan for about 5 years (because in addition our initial down was larger than the conventional 20%, and sometimes when bonuses from employment were more than expected, I made the mistake of putting more of the bonus into principle reductions)…Looks like it might backfire now, if there’s a depression.

[Davard]

Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.

[Davard]

Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.

[Davard]

Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.

[Davard]

Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.

[Davard]

Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.

[patientrenter]

Davard,

Here are some questions that I use for myself:

1. Are most voters homeowners?

2. Do most homeowners have mortgages?

3. Is a home the biggest asset of most homeowners?

4. Do most regular people see themselves as net borrowers or net lenders?

5. Do most businesspeople see themselves as net borrowers or net lenders?

6. Does inflation benefit people who borrow more than people who save, because the debts can be repaid in devalued currency?

7. Can politicians arrange for inflation, if they use all their powers? (Think of recent events, if you are assessing whether pols will self-limit their actions.)

8. Will most politicians do what most voters and most businesspeople want them – really, really want them – to do?

I hope thinking about these questions helps.

[patientrenter]

Davard,

Here are some questions that I use for myself:

1. Are most voters homeowners?

2. Do most homeowners have mortgages?

3. Is a home the biggest asset of most homeowners?

4. Do most regular people see themselves as net borrowers or net lenders?

5. Do most businesspeople see themselves as net borrowers or net lenders?

6. Does inflation benefit people who borrow more than people who save, because the debts can be repaid in devalued currency?

7. Can politicians arrange for inflation, if they use all their powers? (Think of recent events, if you are assessing whether pols will self-limit their actions.)

8. Will most politicians do what most voters and most businesspeople want them – really, really want them – to do?

I hope thinking about these questions helps.

[patientrenter]

Davard,

Here are some questions that I use for myself:

1. Are most voters homeowners?

2. Do most homeowners have mortgages?

3. Is a home the biggest asset of most homeowners?

4. Do most regular people see themselves as net borrowers or net lenders?

5. Do most businesspeople see themselves as net borrowers or net lenders?

6. Does inflation benefit people who borrow more than people who save, because the debts can be repaid in devalued currency?

7. Can politicians arrange for inflation, if they use all their powers? (Think of recent events, if you are assessing whether pols will self-limit their actions.)

8. Will most politicians do what most voters and most businesspeople want them – really, really want them – to do?

I hope thinking about these questions helps.

[patientrenter]

Davard,

Here are some questions that I use for myself:

1. Are most voters homeowners?

2. Do most homeowners have mortgages?

3. Is a home the biggest asset of most homeowners?

4. Do most regular people see themselves as net borrowers or net lenders?

5. Do most businesspeople see themselves as net borrowers or net lenders?

6. Does inflation benefit people who borrow more than people who save, because the debts can be repaid in devalued currency?

7. Can politicians arrange for inflation, if they use all their powers? (Think of recent events, if you are assessing whether pols will self-limit their actions.)

8. Will most politicians do what most voters and most businesspeople want them – really, really want them – to do?

I hope thinking about these questions helps.

[patientrenter]

Davard,

Here are some questions that I use for myself:

1. Are most voters homeowners?

2. Do most homeowners have mortgages?

3. Is a home the biggest asset of most homeowners?

4. Do most regular people see themselves as net borrowers or net lenders?

5. Do most businesspeople see themselves as net borrowers or net lenders?

6. Does inflation benefit people who borrow more than people who save, because the debts can be repaid in devalued currency?

7. Can politicians arrange for inflation, if they use all their powers? (Think of recent events, if you are assessing whether pols will self-limit their actions.)

8. Will most politicians do what most voters and most businesspeople want them – really, really want them – to do?

I hope thinking about these questions helps.

[Coronita]

[quote=Davard]Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.[/quote]

Frankly, I’m sort of at loss what the Fed is really trying to do… There’s already talk about Fed dropping rates again….And some are speculating now it will close to 0%. That’s really the last wildcard. I’m trying to figure out why the dollar hasn’t been tanking more than it should. Perhaps, since the rest of the world’s economy is in shambles too. No idea…But it seems like the Fed is intentionally gonna try to inflate it’s way out of this mess. And europe looks like it’s in a lot worse shape than the u.s. right now. It’s pretty interesting what the economic summit China is saying what they are planning on doing. With an global economic crisis, their plan (described in this euro-asia economic summit) is that they are planning to keep their economy going by spending money domestically on infrastructure (rail systems/roads/transportation/etc) throughout the country during this global economic downturn. I wouldn’t be surprised if massive investments are made in alternative energy too, (since China probably has a vested interest in not being so dependent on oil too). I guess that way, they can keep people employed and keep the economy going. They mentioned in one of these summit meetings with euro nations that that was their strategy during the last asian financial crisis…And I guess when you have such a large budget surplus, you can afford to do this, and keep people employed.

OT: on my flight over to china, I watched a movie called “An Amerian Girl”. It was about the great depression. Ironic, and it was pretty sad to watch (for me that is).

[Coronita]

[quote=Davard]Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.[/quote]

Frankly, I’m sort of at loss what the Fed is really trying to do… There’s already talk about Fed dropping rates again….And some are speculating now it will close to 0%. That’s really the last wildcard. I’m trying to figure out why the dollar hasn’t been tanking more than it should. Perhaps, since the rest of the world’s economy is in shambles too. No idea…But it seems like the Fed is intentionally gonna try to inflate it’s way out of this mess. And europe looks like it’s in a lot worse shape than the u.s. right now. It’s pretty interesting what the economic summit China is saying what they are planning on doing. With an global economic crisis, their plan (described in this euro-asia economic summit) is that they are planning to keep their economy going by spending money domestically on infrastructure (rail systems/roads/transportation/etc) throughout the country during this global economic downturn. I wouldn’t be surprised if massive investments are made in alternative energy too, (since China probably has a vested interest in not being so dependent on oil too). I guess that way, they can keep people employed and keep the economy going. They mentioned in one of these summit meetings with euro nations that that was their strategy during the last asian financial crisis…And I guess when you have such a large budget surplus, you can afford to do this, and keep people employed.

OT: on my flight over to china, I watched a movie called “An Amerian Girl”. It was about the great depression. Ironic, and it was pretty sad to watch (for me that is).

[Coronita]

[quote=Davard]Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.[/quote]

Frankly, I’m sort of at loss what the Fed is really trying to do… There’s already talk about Fed dropping rates again….And some are speculating now it will close to 0%. That’s really the last wildcard. I’m trying to figure out why the dollar hasn’t been tanking more than it should. Perhaps, since the rest of the world’s economy is in shambles too. No idea…But it seems like the Fed is intentionally gonna try to inflate it’s way out of this mess. And europe looks like it’s in a lot worse shape than the u.s. right now. It’s pretty interesting what the economic summit China is saying what they are planning on doing. With an global economic crisis, their plan (described in this euro-asia economic summit) is that they are planning to keep their economy going by spending money domestically on infrastructure (rail systems/roads/transportation/etc) throughout the country during this global economic downturn. I wouldn’t be surprised if massive investments are made in alternative energy too, (since China probably has a vested interest in not being so dependent on oil too). I guess that way, they can keep people employed and keep the economy going. They mentioned in one of these summit meetings with euro nations that that was their strategy during the last asian financial crisis…And I guess when you have such a large budget surplus, you can afford to do this, and keep people employed.

OT: on my flight over to china, I watched a movie called “An Amerian Girl”. It was about the great depression. Ironic, and it was pretty sad to watch (for me that is).

[Coronita]

[quote=Davard]Fat_Lazy_Union_Worker

You sound like you’ve been responsible – making payments, paying down principle, etc. I am in a similar boat, but I have not been paying down principle, just sticking with the monthly payments. I am definitely going into a capital preservation mode – I need to have the flexibility that if I get laid off, I have the cash on hand to pay my monthly bills for an extended period of time, especially if we are headed down to a fat depression.

I think a lot of non-defaulting Americans are going this way as well, leading to temporary deflation. Hopefully our future leaders in Washington, whomever they may be, start looking at saving and cutting costs as well, else we’ll just start printing more and more money to devalue the currency, and lead to inevitable inflation. Hopefully that is a worse case scenario, instead of these Argentina-like scenarious I’ve seen described as possible futures… which I’m not completely dismissing.[/quote]

Frankly, I’m sort of at loss what the Fed is really trying to do… There’s already talk about Fed dropping rates again….And some are speculating now it will close to 0%. That’s really the last wildcard. I’m trying to figure out why the dollar hasn’t been tanking more than it should. Perhaps, since the rest of the world’s economy is in shambles too. No idea…But it seems like the Fed is intentionally gonna try to inflate it’s way out of this mess. And europe looks like it’s in a lot worse shape than the u.s. right now. It’s pretty interesting what the economic summit China is saying what they are planning on doing. With an global economic crisis, their plan (described in this euro-asia economic summit) is that they are planning to keep their economy going by spending money domestically on infrastructure (rail systems/roads/transportation/etc) throughout the country during this global economic downturn. I wouldn’t be surprised if massive investments are made in alternative energy too, (since China probably has a vested interest in not being so dependent on oil too). I guess that way, they can keep people employed and keep the economy going. They mentioned in one of these summit meetings with euro nations that that was their strategy during the last asian financial crisis…And I guess when you have such a large budget surplus, you can afford to do this, and keep people employed.

OT: on my flight over to china, I watched a movie called “An Amerian Girl”. It was about the great depression. Ironic, and it was pretty sad to watch (for me that is).

[Author]

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