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bb2018

I think many think articles like this intentionally make the numbers seem as scary as possible. Negative currency (debt) is a good thing for most people. It is what enables people to buy cars and houses or go to college. Of course, many individuals will get in over their head but on the whole it is a positive thing that individuals can take out mortgage and owe more on the house than they put down. The same goes for companies and governments.

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>I think many think articles like this intentionally make the numbers seem as scary as possible. Negative currency (debt) is a good thing for most people. It is what enables people to buy cars and houses or go to college.

Either that, or cheap college tuition.

Exactly. Most people have significantly more than $86k debt in the form of a mortgage. I owe a lot more than $86k on the mortgage for my home.

I have more assets than debt and I could pay off my mortgage but it's simply not the best way for me to spend my capital.

Additionally, I suspect this article is using a median value for "average income" but a mean value for "average debt." This paints a misleading picture.

So, speaking in terms of net value, you don’t have debt.

Assets = Liabilities + Equity.

In other words, $350k home = $300k mortgage + $50k in equity. You still have debt. Its just that the debt was exchanged for something. Its the same equation for credit card debt.

No one takes on debt without receiving something in return.

Well people do take on debt for things that are quickly worth nothing. For example, you buy groceries with a credit card. You eat them; they are gone. But you still have the debt.

Or you buy a car. It quickly loses value, but you still have the debt based on the original purchase.

The formula still holds, but the "equity" part is negative, which leads many people to conclude that bankruptcy is a better option than paying for something they no longer have or is no longer worth what they owe.

> Or you buy a car. It quickly loses value, but you still have the debt based on the original purchase.

Aside from perhaps the first year of owning a financed car, it is worth more than remaining principal on the loan for the majority of the loan's duration.

Speaking in terms of net value, neither does the world have "worldwide (...) record $86,000 [debt] per person".

That's obviously not the angle this article takes though. Obviously there is more than enough assets to cover worldwide debt and one only goes into debt to obtain something of value. The context here is debt on paper excluding assets.

And every debt is someone else's asset. I have a retirement plan that owes me money, that has US bonds, that I pay part of the interest on with my taxes. It is when the credits all pile up on the same group and they don't use it wisely, the world can get into a real conundrum that seems to only be solved by violence.

This article isn't about net value. "The world" does not have $86k of net debt per person. That would be a mathematical impossibility.

First, even if you couldn't pay off your mortgage today that doesn't mean you would be in a bad position at all. If you had enough to contribute 50k a year (plus job increases) and had 500k left on a house you would be in great shape. You would be happy to have the debt and the entity issuing you the debt would be happy to be repaid.

Second, while it is useful to think of debts in terms of things like mortgages and auto loans, most of this global debt is government debt. Think locally - your local town may need 50 million dollars to build a new school. They aren't increasing taxes for one year to build the school they instead take on 50 million dollars of debt in the form of bonds. So even if you have no personal debt you still have tens or hundreds of thousands of dollars in debt which the government has taken out which can reasonably be repaid overtime.

I'm glad you agree that debt isn't necessarily bad.

The anecdote about secured mortgage debt might apply equally well to government debt. Most debt is serviceable.

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