Counting Zeros sends special thanks to Patrick for his comments on Saturday’s post regarding high interest loans:
If I had a mortgage and I could pay down an extra $15K it could potentialy save me $25K over the term of the loan. To me that’s important as I want the freedom of not having any debt one day. I can take equity from my home at under 3%. I would rather use equity money and invest in a high yield return of 7% with moderate risk.
Always very handy to know what one’s banker friends would do if it were their money! And as luck would have it this was the exact question my brother and I were discussing that day over lunch — how to calculate whether it’s better to pay off your mortgage or put your money into something else?
And thanks to my father for the following reaction …
Dearest Counting Zeros Daughter,
There are 3 reasons you would not lend GBP 15,000 for a 20,000 repayment four weeks later.
1.As a good Christian, never mind Catholic, you know that usury is a serious moral offence. The argument that if you do not lend at that usurious rate someone else will do it, is an amoral defence much favoured by Nazi concentration camp guards; it does not even merit discussion.
2. As an intelligent capitalist, you know that borrowers who are prepared to pay those rates have a high non repayment rate and usually are on the brink of bankruptcy and hardly ever have worthwhile unpledged collateral!
3. A third good reason for not getting into the loan sharking business is that this would make you a competitor of a long established global organisation of Sicilian origin, for whom loan sharking is one of their four core competencies …drugs, prostitution and gambling being the other three! They do not welcome competition, having avoided reading Adam Smith, and have been known to take their competitors for a long walk on a short pier!
Need a protective father say more?
As for the gods (according to The Deck of Small Change, with which I’ve been reunited), they say it’s time for a professional. That’s the assignment from the Jack of Diamonds this week — I’m to make an appointment with a financial advisor. Let’s see if they can make heads or tales of how I might finance my dream life differently …