Is it investing in the future, or borrowing from it?
About borrowing money, RECENTLY, I heard some stories about my younger brothers. In the past few years, as fintech has really developed, it has become so easy to borrow money that many people, especially young people, are prone to impulsive spending, overborrowing and ending up with tens of thousands of dollars in debt with high interest rates.
Why not borrow money when you are young?
When you’re young, you’re short of money and prone to impulsive borrowing, but most of the time, impulsive decisions turn out to be foolish in retrospect, and may carry more burdens than you can handle on your own.
Why these younger brothers have fallen into the mire of interest rolling interest debt in these two years, which has to say that in the past few years, all kinds of Internet finance P2P cash loans are too convenient. Little mobile phone, a few minutes, a loan of several thousand yuan on the instant to the account. But maybe it’s just a few hands of cards and thousands of pieces are lost again, and then another lending platform, continue to repeat the process, thinking about turning over, the result is getting deeper and deeper.
When I was in college, I was young, I wanted to spend money, I had a lot of consumer needs, but the reality was that it was really difficult to borrow money. The only way to borrow money was probably by credit card, and the most youth-friendly bank at the time was China Merchants Bank in Shenzhen. As early as 2004, he recommended me to get a credit card outside my dormitory, but the limit was only 3000 yuan.
So, even if I spend impulsively again, the debt I can bear is only this 3,000. And for a few hundred yuan of living expenses at that time I, three thousand has been a sum of money, every month is always careful, “weak water three thousand, only take a ladle”, also afraid not to go up.
Although the campus credit card business is not large, it is still a great temptation for many students who lack self-control. In 2009, the China Banking Regulatory Commission even stopped the relatively conservative and standardized campus credit card business of banks. However, the essence of students’ demand for money and consumption impulse has not disappeared, which gave various kinds of Internet “campus loans” an opportunity to invade. As a result, in the past few years, we have again seen all kinds of “campus loan” chaos in the news.
Impulsively borrow money that you can’t pay back, on the one hand, bring heavy burden to yourself and even the related direct family; On the other hand, may also early bad their credit.
People in rivers and lakes, who do not have a few relatives and friends to borrow money from you, sometimes borrow not much, thousands or thousands of pieces, known as emergency. I usually borrow, but some of them don’t get heard from for years and become bad debt to me. In fact, my losses are limited, but they generally lose credibility with me from then on.
Liu Shen once wrote a story about a friend of his. It probably said: He had a rich friend who achieved a “small goal”. A relative’s nephew borrowed 20,000 yuan from the friend to buy a car, but he didn’t return it for a long time. At the beginning his friend also asked twice, but also said to return, later did not return the message installed disappeared.
His friend said: Twenty thousand dollars is nothing to me, but it’s not worth it to him. He could have borrowed more money from me in the future. Six gods also suddenly: yes, for only twenty thousand pieces, so precious life resources, a squander away.
As an ordinary person, years of struggle, sometimes is not the lack of a “expensive” person to help it?
Why not lend to young people too easily?
The person that can borrow money commonly, be in old people, accumulated for many years had a few savings, the purpose that borrows money naturally is to make money (interest) ah.
A number of online lending platforms have emerged in the past few years, offering interest rates as high as 10 percent or more to attract funds, with some even approaching 20 percent amid fierce competition. Compared with banks’ interest rates of around 3% for five years, this is certainly attractive. Platforms like this proliferate, sprout, expand, boom, and eventually burst. Platforms run away or explode. Many middle-aged and elderly people who invest in these platforms earn interest for several years, but eventually lose their principal.
These platforms can take in money at 10%+ interest and naturally need to lend it out at higher rates to make money. And if the money is lent to individuals, most of it goes to cash-strapped young people with impulsive spending habits. Loan platforms lend thousands of yuan of small loans to these young people in large quantities, and such small loans generally have no risk control system protection, but rely on high interest rates to cover the possible high bad debt rate.
These petty cash loans are essentially pure credit loans without “consumption scenes”. Who knows what young people borrow money for, maybe impulse spending, maybe rewards on live broadcast, maybe mahjong. Eventually, the compulsion continues, and you end up in a vicious cycle until you can no longer afford it.
In such a scenario, lenders may lose their money and borrowers may be in debt, so why hurt each other? Reflecting on the lending mess of the past few years, it may be that only some of us have earned it, but this is not a better social environment to live in.
The only money that young people are advised to borrow
If you must borrow money to buy anything, it is to buy assets, assets that will hold their value or even grow in value.
Under the current environment of China in recent years, it may be to buy a house. A house is a kind of physical asset, and as an asset, it has some special attributes as follows:
- Can resist the devaluation of currency, has the ability to maintain value, and the function of precious metals such as gold is similar;
- It’s habitable, it’s useful, it’s more valuable than, say, gold;
- Most importantly, being able to leverage safely at low interest rates gives you a chance to cash out your future early.
After the loan to buy a house, there is a negative saying called: mortgage slave; It sounds bad, but in fact, this is the opportunity given by The Times, and the time window of this opportunity may be running out.
In the United States, from the 1970s to 2008 before the subprime crisis, the house continued to rise for nearly 40 years; Now the urbanization process in the United States has almost been completed, and China’s real estate has been commercialized and marketized for more than 20 years. However, there is still some room for the process of urbanization rate, but the remaining time of this space is estimated to be not too long.
Now the government’s various real estate control policies, price limit, loan limit, limit, the essence is to control the pace and speed of the rise. In the last decade or so, housing prices have either stagnated or skyrocketed so fast that young people can’t get on their cars. Such a policy is actually very uncomfortable for many middle-aged people who want to improve their second home. Even if they have the money to buy a house, it is quite difficult. With a high down payment, the leverage will be small.
In fact, such policies are helping young people to extend the time window, but also for the future of a city, lost to the young people of the city, the future is hard to say.
Taking out a loan to buy a house can also have the side effect of increasing your cash flow pressure, which can also lead to a decrease in your perceived quality of life. We don’t have the free will of our youth anymore. We all carry something with us.
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In general, there are three financial tables:
- Balance sheet
- Statement of cash flow
- The income statement
When you are young, put more debt in assets that can grow and maintain value, and control cash inflows over outflows so that future profits will be better and better.
Charlie Munger says:
We are always too old too soon and too smart too late.
Now that I’m nearly over it, I hope you’re young enough.
Write some words, draw some pictures, record the moment of growth. Wechat public account “instant”, since we met, it is better to go together.
