If I owe money on some land, and do the minimum monthly payments, should I keep doing the min. or pay it all off if I think we are going into hyper inflation? My brain says keep doing the min. because the fed may be handing out 10k at a time, my income may go through the statosphere and it will be easy peazy to pay off the principal. I think I might be missing something, it can't be that easy can it?
Inflation causes land value to go up, but it does make debt easier to deal with because your income should increase with the inflation. The problem arises if Inflation causes you to lose your job and you can't make the payments.
The principle of a loan isn't subject to inflation. Only the interest may rise, if it is variable. Even if that happens, you could just pay off the principle at that point to avoid paying the interest altogether.
If actual hyper-inflation occurs, that would mean you can pay off the entire loan with less than the cost of a cup of coffee. So you would benefit significantly from not paying it off now.
You're better off investing the money into commodities if you're expecting hyper-inflation (or even just continued high inflation). Or buy currencies which you expect to be affected less than your own.
[ - ] MaryXmas 1 point 1.9 yearsJun 12, 2022 16:44:39 ago (+1/-0)
All depends on you income. Even if there is a lot of inflation, employees might not see a big raise. If you work for yourself and can charge more, it is in your best interest to hold a long loan. I had the same thought. I just don't like being in debt so I am paying off my mortgage, even though it is a super low rate.
As long as your interest tate is below inflation, that is free money to you that is costing the bank/ mbs owners. I am assuming that you have a fixed rate.
That is why the interest rate on loans needs to jump the inflation rate before anyone buys any mbs loans in the near future, and why interest rates on loans will most likely need to jump to at least 12% before there is any interest from the market.
Inflation is inbuilt into the current economic system. If inflation greater then loan rate then make min payments else make max payments
Expecting the government at this point to hand out more cash when the fed is getting ready to tighten the fuck out of the loan system (thereby reducing the amount of money in circulation) is rather stupid.
That being said. How secure is your income stream. Incomes are not likely to increase by much (they're crashing the economy partly to avoid that). And, with everybody tightening their belts if you sell stuff expect pain.
If you plan on going min payment route have a battery of cash to make payments if your income stream is cut off (preferably at least 3 months min).
great advice, my income is not secure but I have bitcoin, enough cash to pay off the principal. To be honest I would rather buy gold right now or bitcoin. I feel stupid for having several k in cash sitting there getting weaker and weaker and weaker. lol
[ + ] FreeinTX
[ - ] FreeinTX 4 points 1.9 yearsJun 12, 2022 16:28:10 ago (+4/-0)
Inflation causes land value to go up, but it does make debt easier to deal with because your income should increase with the inflation. The problem arises if Inflation causes you to lose your job and you can't make the payments.
[ + ] GloryBeckons
[ - ] GloryBeckons 2 points 1.9 yearsJun 12, 2022 16:49:39 ago (+2/-0)*
If actual hyper-inflation occurs, that would mean you can pay off the entire loan with less than the cost of a cup of coffee. So you would benefit significantly from not paying it off now.
You're better off investing the money into commodities if you're expecting hyper-inflation (or even just continued high inflation). Or buy currencies which you expect to be affected less than your own.
[ + ] foxtrot45
[ - ] foxtrot45 [op] 0 points 1.9 yearsJun 12, 2022 17:32:25 ago (+0/-0)
[ + ] MaryXmas
[ - ] MaryXmas 1 point 1.9 yearsJun 12, 2022 16:44:39 ago (+1/-0)
I had the same thought. I just don't like being in debt so I am paying off my mortgage, even though it is a super low rate.
[ + ] ParnellsUprising
[ - ] ParnellsUprising 1 point 1.9 yearsJun 12, 2022 15:50:52 ago (+1/-0)
That is why the interest rate on loans needs to jump the inflation rate before anyone buys any mbs loans in the near future, and why interest rates on loans will most likely need to jump to at least 12% before there is any interest from the market.
[ + ] patchCodeUnsuccessful
[ - ] patchCodeUnsuccessful 1 point 1.9 yearsJun 12, 2022 15:50:35 ago (+1/-0)
If inflation greater then loan rate
then make min payments
else make max payments
Expecting the government at this point to hand out more cash when the fed is getting ready to tighten the fuck out of the loan system (thereby reducing the amount of money in circulation) is rather stupid.
That being said. How secure is your income stream. Incomes are not likely to increase by much (they're crashing the economy partly to avoid that). And, with everybody tightening their belts if you sell stuff expect pain.
If you plan on going min payment route have a battery of cash to make payments if your income stream is cut off (preferably at least 3 months min).
[ + ] foxtrot45
[ - ] foxtrot45 [op] 0 points 1.9 yearsJun 12, 2022 17:29:55 ago (+0/-0)
[ + ] Cantaloupe
[ - ] Cantaloupe 0 points 1.9 yearsJun 12, 2022 17:54:23 ago (+0/-0)
[ + ] Cantaloupe
[ - ] Cantaloupe 0 points 1.9 yearsJun 12, 2022 17:52:45 ago (+0/-0)
[ + ] diggernicks
[ - ] diggernicks 0 points 1.9 yearsJun 12, 2022 15:44:47 ago (+0/-0)
[ + ] foxtrot45
[ - ] foxtrot45 [op] 0 points 1.9 yearsJun 12, 2022 17:27:12 ago (+0/-0)
[ + ] diggernicks
[ - ] diggernicks 0 points 1.9 yearsJun 12, 2022 17:27:54 ago (+0/-0)