Re:Why Don't People Manage Debt Better?
by mrow84 on Friday February 19, 2016 @02:37PM
(#11135984)
My understanding of debt is as the cost of shifting purchases in time, in the same way as barrkel [0].
Working out what the cost is going to be up front only works if you stick to your assumptions throughout repayment, which is a good way of understanding part of the problem with debt - even if you calculate properly against uncertain events for the average case, you as an individual can be caught out by bad luck.
Attempting to subsequently solve the consequences of your bad luck with further debt seems to me an instance of the gambler's fallacy [1], and is another important part of the problem with debt.
Working out what the cost is going to be up front only works if you stick to your assumptions throughout repayment, which is a good way of understanding part of the problem with debt - even if you calculate properly against uncertain events for the average case, you as an individual can be caught out by bad luck.
Attempting to subsequently solve the consequences of your bad luck with further debt seems to me an instance of the gambler's fallacy [1], and is another important part of the problem with debt.
[0] https://news.ycombinator.com/item?id=11135283 [1] https://en.wikipedia.org/wiki/Gambler%27s_fallacy