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00:00:01
He Who Goes A-Borrowing Goes A-Sorrowing
48 Plays1 year ago
In this episode Andrew and Patrick discuss consumer debt, student loans, mortgages, how commonplace debt has become in our society, the history of auto loans, and how solar flares impact radio wave propagation.
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Transcript
Introduction to 'Copybook Headings'
00:00:00
Speaker
and the brave new world begins when all men are paid for existing and no man must pay for his sins as surely as water will wet us as surely as fire will burn the gods of the coffee book headings with terror and
00:00:29
Speaker
Hello everybody and thank you for joining us for another episode of the Copybook Headings podcast. If you're a new listener, just joining us for the first time. This show is inspired by the poem by Rudyard Kipling called The Gods of the Copybook Headings. And every week we take an old saying, proverb or maxim and we break it down to see what we can learn from it and see if there's any ancient wisdom that's still relevant today in these old sayings.
Catch-up and Podcast Anticipation
00:00:50
Speaker
I'm your host Patrick Payne and with me as always is my co-host Andrew Stevens. Andrew, how are you man?
00:00:56
Speaker
Hey, I'm doing great. How are you? Doing good. Had a busy day. Busy day at work. But nice to kick back and talk proverbs again as we do weekly. Yeah.
Solar Flares and Electronics Preservation
00:01:09
Speaker
We were just talking before we started that there's supposed to be some, what, solar flare, coronal mass ejection that's supposed to fry us all or fry all our electronics? That's what's going on right now. That's the word on the street. If you hear this, it didn't happen.
00:01:26
Speaker
Um, but yeah, but yeah, tomorrow is, it's the word on the street and it's the Friday. Unless we found some way, some way to preserve this. Yeah. After we put, we put our computers on the Faraday cage right after we record. And, uh, this is a great idea. The distant past.
00:01:47
Speaker
Yeah, I'm gonna wrap it in a shoe box full of with lined with tin foil or as soon as I'm done here. But you're and then you're saying
00:01:58
Speaker
This is a good time with this kind of phenomenon.
Impact of Solar Flares on Radio Waves
00:02:00
Speaker
It's a good time to jump on on the ham radio. Is that right? Yeah. Mm-hmm. Yep, especially the the HF waves the high frequency waves they sit they call these they're HF but actually that's like the lowest waves because you have HF then VHF and UHF so HF is actually the lowest frequency, but yeah, the HF waves are they bounce all over when when you got these when you got these
00:02:23
Speaker
solar flares, it ionizes the atmosphere, I guess, and it makes the radio waves bounce off. So then you can kind of skip it around the world, do some really long contacts. So how long have you been into into ham radio stuff?
00:02:40
Speaker
I got it just kind of on a whim because all the little walkie talkies I used were trash, you know, like you, the ones you get at the store just don't work very good. They don't go very far. And it's almost like, well, the ham ones do because they allow you to use different frequencies and allow you to use more power. Yeah. And, uh, so I just got the basic license years and years ago. I think I was like college age or something, maybe somewhere around there. And I got a little walkie talkie and then
00:03:08
Speaker
A few years back, I decided to upgrade my license and get the general, which is like the second tier of ham radio license so I could do the HF stuff. That's where you need the second license to do the cool long, long distance around the world stuff. But even just a basic license is kind of fun because then you have walkie talkies that like work. You can take them out hiking or if you're, you know, caravan and driving in a car with someone like you can, they work great.
00:03:35
Speaker
That's great. I'll have to look into that. I've thought about it before. Yeah, you just have to study and take the test. I got a little app on my phone and just ran through the questions a million times until I memorized them and then I forgot most of it. It's like high school. What's the farthest you've talked to someone, farthest away? Slovenia. Wow.
00:03:58
Speaker
Yep, I was and that was, that was, that was on a little teeny radio. That was a five watt radio. So I mean, a lot of guys that have because it was a mobile one, portable, a lot of the guys that do these, you know, these old ham guys, they'll have like a little ham shack in their house, you know, and they have a gigantic antenna off their roof. And they got 100 watts or something like that. I had this little that I took hiking with me up at the top of a mountain.
00:04:26
Speaker
I took this little wire rolled up wire antenna and did it and was just talking to some people like out on the west coast and then and then I had a guide he was coming in real scratchy and I exchanged call signs with him and he had like an accent and I'm like oh dang that was kind of a cool one and I went home and looked up his call sign he's out of Slovenia that's cool man so but yeah if the conditions are right they can go far I think
00:04:50
Speaker
I think my biggest barrier is that I don't really like talking to people. I would just be like eavesdropping the whole time.
00:05:02
Speaker
Well, that was part of my my thing too is I didn't like to just sit around just yak all day long. You wouldn't suspect that knowing from my podcast, I just talk all the time. But I would get bored. I was like, I don't know what to do with this. But there's like little games you can play and stuff like what I was doing when I hit him on the when I talked to that guy on top of the mountain is they have like a like a little game where you can try to like
00:05:23
Speaker
make contacts from the tops of mountains. So you combine ham radio with hiking. And so you get points for different mountains that you do. And those guys don't chat. They just exchange call signs because they're in a hurry. They're up on the top of a mountain. They're like, hey, how many can I get? Bing, bing, bing, bing, bing, bing. They talk to six guys, exchange call signs, say hey, and then they're gone. So we don't need to sit and shoot the breeze. We're just like, I don't know. It's just fun.
00:05:45
Speaker
Um, it's, it's very nerdy. It's probably my nerdiest hobby in the nerd, the dorkiest thing about me, but, uh, yeah, that's kind of what I got into anyway.
The Proverb on Borrowing by Benjamin Franklin
00:05:55
Speaker
Um, that was a long preamble, but we got a good, got a good proper of this week, right? This is one that you had selected. Yeah. Um, it it's, um, I guess there's a few, you know, as always, there's a few different versions. Those who go a borrowing go a sorrowing.
00:06:16
Speaker
I was looking through our list and caught my eye. I like the kind of folksier sounding ones, you know, the old fashioned. I think it, from what I found, if not originated with Benjamin Franklin, it certainly popularized by him in, I think in one of his, his Poor Richard Almanac publications.
00:06:43
Speaker
So yeah, so this would be going back to the mid 1700s with Benjamin Franklin. That's what I found too, doing research on it is old, old, old Benny Franks again. Yeah. The Almanac. Yeah, that's, he has a lot of good ones. And this one is, I like the sound of it too. It's the folksy sound, but it's pretty, pretty straightforward, right? You borrow money if you're,
00:07:12
Speaker
Borrower, if you're someone who's in debt, it's going to lead to sadness, to sorrow. Yeah. I mean, it's pretty straight on its face with this one, I think, right? Yeah. Well, what it did is it made me wonder about the historical context a little bit more because we
00:07:37
Speaker
Right now in our culture, our society, we are just awash in consumer debt. Everyone has it. That's just a part of life. Whereas in Benjamin Franklin's time, I think it was much less common that I think it's probably more just reserved for the upper classes to be borrowing.
00:07:59
Speaker
a lot of money and to get into trouble that way. You see the movies, they're supposed to take place back then, the gambling they do at their little parties and stuff and just bankrupting their families by gambling it all the way. So I was having wondering about how long have we been kind of obsessed with debt this way, right? And I found some
00:08:30
Speaker
I found a few sources. And I think the, let me see if I can find what I was looking at here. Kind of the big one is in the early 1900s. So this would have been during and right after World War I, you know, automobiles, right? Got Ford making,
00:08:58
Speaker
mass producing cars for the common man, but still price-wise kind of out of reach for a lot of people. And so in 1919, General Motors came up with
00:09:14
Speaker
with the, the financing model that we are more familiar with. So thanks. An example. Yeah, right. That's an example of in 1919, if you're out going, going out to buy a car, you had a couple options. You could go with Ford's weekly payment plan. So you make a down payment. You pay five or $10 a week until the car is paid in full. And then you take your car home from layaway.
00:09:43
Speaker
So you never, you didn't get to possess your car until you paid it off, which was standard
Historical vs. Modern Debt Culture
00:09:48
Speaker
back then. And I mean, even in my childhood, I feel like it was pretty, it was not unheard of for it to do. Yeah. So at a department store, you, you put, you buy all the Christmas toys, you know, in the summer and you just pay it off until you pay it off and then you get to pick it up and take it home. Um, so that was the first option.
00:10:10
Speaker
But General Motors Acceptance Corporation came up with making a 35% down payment, taking your car home, and then paying the rest over the course of a year in installments. OK. So that was like the big one. Yeah. For those weekly or monthly payments? I bet it was weekly. OK. Since Ford was. Yeah. And it's only over a year. Yeah.
00:10:40
Speaker
And then the next big one was, you know, during the Great Depression with home loans. That's when home loans became a thing because before that there were home loans, but people they would only last for like three years. So if you can imagine the kind of house you might be able to afford.
00:10:58
Speaker
if you have to pay it back in three years. And so the government kind of stretched that out all the way up to 15 years. You could also get a loan to like electrify your house if you didn't have electricity so that you could buy all the nice gadgets that use electricity. So yeah, so that's what really stretches out in with these FHA loans in the thirties.
00:11:28
Speaker
That's kind of how we get where we are now. And I don't know, a little odd departure from our normal stuff, a little history lesson here, but. That was awesome. Yeah, no, that was a really interesting lesson. I love that. Well, thanks. Yeah, so I just had me thinking about, you know, Benjamin Franklin's timer earlier, you just, people really stayed away from debt for the most part. So this was pretty, I think it was a little bit stronger
00:11:55
Speaker
admonition and people I think maybe had more common sense about debt because they didn't need it as much and so they really avoided getting into it. Yeah, exactly. I'm just imagining their earliest repo man for the Model T's that someone paid their 35%. That'd be a great story, a great TV show or something.
00:12:18
Speaker
Oh, dude, that would be the first repo, man. Yeah, I love it. Yeah. Yeah, but now debt is everywhere. Debt is, I mean, everyone has a 30-year mortgage on their house mostly. I mean, you could do 15 or 20. But I think 30 is probably the most common. And even stuff just like because my wife and I are fairly pretty anti-debt.
00:12:43
Speaker
Like we don't have car payments or student loans or anything like that. And, but even, even we have like the, the loan on your cell phone, because it's like, everyone does that like now cause it's like giving the new phone and just tack on a few bucks extra to the payments. Like, yeah, why not give me the new phone? Um, so yeah, it's just, it's a, it's kind of seeped into every aspect of, of our economic lives. It seems like anyway. Yeah. Um,
00:13:13
Speaker
Yeah, it's something I think about getting to the point where we might want to change where we're living or change our house anyway. And yeah, it's a headache that you got to.
00:13:30
Speaker
we are still definitely in the position where we need to borrow for that, right? Yeah, for sure. So he who goes a borrowing goes a sorrowing. So Benjamin Franklin saying, if you're the kind of person that goes around borrowing money, it's ultimately going to be to your detriment. It's ultimately going to lead you to sadness. I mean, do you think that's relevant today? I mean, with all the debt we have, is that still something that's good advice?
00:14:01
Speaker
I tend to think it is, but I'm curious to know your, your opinion.
Dangers of Credit Card Debt
00:14:05
Speaker
Yeah, I tend to think it is too, but I don't think it's quite the deal breaker anymore. Um, there are, you know, the source of absolute financial ruin or anything like that. I do appreciate, um, the pretty, you know, we've talked about it before, like the, the Dave Ramsey approach, right? It's, it's, um, it's a pretty common sense one. And if nothing else, it's a,
00:14:29
Speaker
it's a lowest common denominator approach, right? Like sure, there are lots of smart people out there and lots of really disciplined people who can handle kind of risky debt. But that's not everyone. That's a distinct minority. And so for the sake of ease, I think that is generally pretty good advice to stay out of debt. I mean, even that though is like,
00:14:58
Speaker
I don't think he ever says, you know, don't borrow to buy a house. I think that's everything else is is kind of that way. But but even he's like, you know, that's just how that's how it is to buy a house. From what I've heard of him. Yeah, it's like if you can buy your house with cash, great. Do it. But yeah, it's probably not realistic. So go for it. But yeah, exactly. Oh.
00:15:27
Speaker
Yeah, so I think like thinking about 1700s though, that's probably more where it's more of like a character issue. Like the way that this proverb talks about borrowing, we might think about it in the context of like gambling, right? People who are going to gamble a lot.
00:15:52
Speaker
tend to gamble even more, right? Like it's something that people really spiral into and get trapped in. I think that's kind of, I imagine that was more the mentality with this in the 1700s that if you're really in the kind of shape where you need to be borrowing money, you know, Mr. Aristocrat, then you're not going to stop. It's just going to keep going until no one will lend you anything anymore and then you're just
00:16:21
Speaker
You know, out on the street. Yeah, you're probably right. But I do think there's some, I mean, I think there's modern relevance to that too. There's always the people who are, seem to be very undisciplined and will borrow money to get a new car. And then their car depreciates in value so much, they get upside down on it. So then they take it into the dealership and trade it in. And the dealership just takes him for a ride a second time.
00:16:46
Speaker
and gets them into an even bigger car payment to cover the balance that they owed on the first one. And there's all sorts of other types of consumer debt, credit card debt. The credit card debt kind of freaks me out when I see the numbers of how much credit card debt Americans have of like, dang, man, the credit cards are nasty. The interest rates should be criminal. I mean, they're just out of control. And if you're carrying a credit card,
00:17:12
Speaker
Balance every month after month after month. That's just it's hammering you so being able to avoid that I think is extremely wise Yeah, I think that's that was one of the best Financial lessons I got growing up and is you know paying off the credit card No matter what and yep, you know, I know some people like like Dave Ramsey, for example will say don't even have credit cards because it's a temptation or or even like
00:17:41
Speaker
thinking it's immoral to get points because it's on the backs of people who are paying that outrageous interest. But yeah, I've only ever treated it like a debit card in that I paid it off every month automatically. But yeah, if you get stuck in that spiral, that's a rough one because that interest will kill you. Yeah. Yeah.
00:18:07
Speaker
We've I've done that before in the past. I don't I'm not currently currently I just typically use debit card for for most purchases, but we've used credit cards for points in the past part part of the issue I would find is Now I had two balances to take care to watch out for like my checking account balance and my credit card balance whereas before it's like How are we doing on our checking account? Oh, yeah, we're totally fine. You know, we got our buffer. We're we're good to go and
00:18:33
Speaker
I can, you know, we're good to spend stuff. Even if emergencies come up, or this and that, and you're like, okay, how much did that all cost us? Oh, we're still okay, or we're not, or we need to tighten up. Whereas if you're putting it on credit cards now, it's just a little bit more complicated, because now you gotta be like, okay,
00:18:47
Speaker
here's what our checking is, but how much we have in our credit card? Has it gone through yet? Did we actually pay it? So it's a little bit more complicated. But I mean, yeah, I can see the lure. I mean, the points are real. We've taken advantage of them before. So there's incentives. But yeah, understand when you're doing that, just you need to be wise enough to realize why they're giving you those points. They're giving it to you because they are hoping that you fail.
00:19:12
Speaker
And they're hoping that you mess up and don't make your payments so they can charge you 18% interest or whatever. Yeah, I think people aren't aware. They don't always consider the risks with how much society kind of has bumpers on it and how much consumer protection stuff there is. People think that there's more than there is, right?
Modern Debt Risks and Misconceptions
00:19:41
Speaker
Yeah.
00:19:42
Speaker
with credit cards or, you know, like we were talking about, we were talking about with cars, like getting upside down on our car and getting, getting fleeced trading it in or, you know, with houses, like back, you know, before 2008, when you had those crazy, the, the Ninja loans, you know, I had a, I had a friend get one of those and just right out of college, bought a brand new, nice big house. Cause they did not care how much you made or how much you had.
00:20:12
Speaker
And then, you know, they ended up upside down on it and had to hang onto it for a while. And, you know, eventually she sold it, but it was, what's a ninja loan? No income, no justified assets. I think is what it stands for or Nina. I think they also called it. No, no income, no assets. They don't, they didn't verify that you had money. You had a pulse. They'd give you a mortgage.
00:20:40
Speaker
Yep. And then had they always, you know, the variable rate and everything. And yeah, it's, it was an interesting time, but I think people thought, well, that's great. Like that would be really predatory if that were to go wrong. So clearly it doesn't exist, right? Yeah. Like there's no way to allow that. Yeah. Yeah. If it's legal, it must be fine. Yeah. And, and that's definitely not the case.
00:21:05
Speaker
Yeah, for sure. So yeah, it's tough, especially because a lot of people that come from poor families whose parents didn't have a lot of financial literacy don't
Importance of Financial Literacy on Debt
00:21:16
Speaker
teach them these things. And then they fall into the same traps again. And it can be kind of a vicious cycle to get out to teach yourself how to, and people like Dave Ramsey, I think are super valuable in that situation. And I can see why some people don't like his style or they disagree with it.
00:21:34
Speaker
For me, I kind of like them, because I'm like, the people who think they're too clever, I'm the opposite. I'm like, yeah, someone did something stupid that sounds exactly like the kind of stupid thing I would do. So maybe I'm better off just cutting up the credit card or something. I don't know. It's hard to go wrong when you're doing just the real simple thing. You can probably do better. You could probably get a little better interest rate if you're maybe leveraging something.
Managing Student Loans
00:22:04
Speaker
certain about being able to do that. But I think definitely any kind of consumer debt should be avoided even today. Yeah. What are your thoughts on student loans? I was very fortunate to not have to have any. Awesome. So that was nice. My parents worked hard to save up for that. And
00:22:30
Speaker
And also instilled in us the value of choosing a school that was not going to break the bank. So I think I only applied to, um, you know, in-state schools or schools that basically had in-state equivalent tuition. So I had very low tuition. Um, and that was very nice. And then when I went to grad school, my like thing about going to grad school is a lot of them will pay you to do it. And, uh,
00:22:58
Speaker
There are certain programs that you should definitely not do unless they're going to pay you to do it, like the humanities, which was my husband. So when I was cut loose for grad school, I was able to pay my own way through good scholarships and having a job and all that stuff. Nice.
00:23:18
Speaker
I know that's harder to do now. Like my wife, she had to take out some loans for her grad school. She worked really hard to pay that off. It was important to her to get that clear fast. Yeah, smart. Yeah, so what about you? What do you think about them? Yeah, kind of the same. I think it's really important to teach your kids
00:23:42
Speaker
what a big deal it is, because when you're 18, it's really hard to understand, you know, you're like, Oh, yeah, borrow money, but like, I'm gonna make so much money when I get out, you know, compared to your minimum wage job, or whatever you're working in high school, it seems like you get a job out of college, a big boy job, and man, you're gonna be in the money.
00:23:59
Speaker
but you know if you got a big loan hanging over your head it really eats it up and then and then your life sucks still and that's not what you want you know you want college to if your graduation to be like hey i can reward myself a little bit now i worked hard but if if you've got eighty hundred thousand dollars in loans it's like man it's just the misery doesn't end yeah yeah i've got it i've got friends who've
00:24:23
Speaker
took on a lot of debt for school and did get really good big boy jobs. But still, they're still chipping away at it. That sucks. After decades. Yeah, it's terrible. My wife and I were talking about something recently. I want to bring up. It's a little off topic. It's not necessarily about debits, it's about finances.
Spending on Experiences vs. Saving
00:24:46
Speaker
I guess she was reading something about, I don't know if it's a book entitled this, or it's just some concept, but it's like die with zero or something. And it's this concept of instead of hanging onto your money throughout retirement and having a big nest egg when you die and leaving it to your kids, instead you're spending that along the way.
00:25:12
Speaker
to make good memories with your children, doing stuff like that, and then retiring with just the bare minimum of whatever you would need. Not a million in the bank, not hundreds of thousands, just you barely got it. You got enough to survive and that's about it. And I thought that was kind of an interesting concept because people are living so long nowadays. If you die and you're 90, your kids will be in their 60s, maybe. And they don't need the money at that point.
00:25:42
Speaker
jobs for a long time. Their house might be paid off or close to paid off. They're probably close to retirement age themselves where they can cash in their IRA. So you're giving them this big windfall to end when you could have been possibly using that money for other things. I thought it was really interesting. I'm curious to know your thoughts. Well, we've talked a little bit about inheritance and things in the past. I personally like the idea of
00:26:11
Speaker
of building up the nest egg. I like the idea of that intergenerational wealth and it's kind of a monument for your family, right? You might not be building actual monuments, but you can have that kind of institution and be grateful for what has come before you. I think maybe I'll be in the position to add to what my
00:26:41
Speaker
my dad leaves behind, you know, in a few decades. And he has worked hard and like, you know, he was the first and I think in his family to do the college thing and professional degree and all that stuff. And, and to see like, and his, his dad was more more blue collar, but you know, and then, you know, his dad was a brick Mason and his dad was probably a farmer, right? Like to see that progression.
00:27:10
Speaker
in the family of the generations to all the hard work that they did to get you to the point where you can start really amassing things for the future generations. And, you know, future generations always squander things. They don't, they don't do great forever, but it's, I think it's still a good goal, but you know, on the other hand, I think it's a good goal to take time with your family and have good times with them. I just don't necessarily think you need to
00:27:42
Speaker
to break the bank or run the risk of being like, well, my dad died when he was 70. I'm going to die when I'm 70. If you're off. Yeah. Then you live to a hundred and you're eating cat food. I don't like that. Yeah. I mean, I agree that...
00:27:59
Speaker
that it's important to leave your kids something.
Overextending Financially in Society
00:28:01
Speaker
It was just an interesting concept that you don't have to wait until you're dead to leave your kids stuff. You can start giving money or helping them out with stuff, helping them with their house, taking them on a nice trip stuff before that. And I thought that was an interesting concept. So I'll probably think about it. And that's something my dad has done for us. It has been great. We were able to go on vacations every few years with all of his kids and grandkids.
00:28:28
Speaker
It is a real blessing to be able to do that. Yeah, that's awesome. So yeah, so your family went from farmer to brick mason to, what was it? My, my grandpa had a lot of different job, like he works.
00:28:41
Speaker
with the railroads a bit. I think he worked with the, uh, the air force a bit. So yeah, so a little more technical. Now you've reached the pinnacle podcast. Yeah. This is what it's all been leading to humanity's major podcaster. Yes. Oh man.
00:29:01
Speaker
We'll see what my kids do. You know, there's no there's no top in this. No, they just can't work. They just have to. I have to make enough so they can just do nothing. They could be women of leisure. There's nowhere to go. Yeah. Well, do you think this is you think this is something that society kind of respects or or or or not? I kind of tend to think that. Dead is far too. People are a little too loose to use you with with debt.
00:29:31
Speaker
I mean, I agree. I think predominantly people take on more than they should and myself included and I'm even more frugal than most.
Final Thoughts on Debt Caution
00:29:44
Speaker
So yeah, I think people go nuts with this one.
00:29:49
Speaker
The two I would say that I would warn people of is, one, the credit cards. I'd say don't carry a credit card balance. First of all, that's number one. Just get rid of that. If you have a credit card balance, attack that as fast as you can. And number two, really think about your car loans, too, because those will kill you. Cars are getting so expensive. Ask yourself if you really do need that car or the one you have with a little bit of maintenance that can last you longer. Because, man, it can make a well-off person
00:30:19
Speaker
broke in a hurry if you get two nice car payments. I mean, I've seen it happen. Yeah, and that's one where they're really stretching out too, right? It was like five years is pretty standard, and now they're up to 10, is that right? Eight or 10, something like that? Yeah, something like that. Those big trucks and stuff. These giant SUVs that cost $100,000. It's crazy. Yeah.
00:30:41
Speaker
Well, yeah, this is a really good one, Andrew. Thanks for picking it, and thank you everybody for listening. We're about out of time, but remember, he who goes to borrowing goes to sorrowing. So watch your finances be responsible, and we will see you guys all next week. All right, we'll see you. Thanks, bye. There are only four things certain since social progress began, that the dog returns to his vomit, and the sow returns to her mind.
00:31:10
Speaker
and the bird-filled bandaged finger goes wobbling back to the fire. And that after this is accomplished and the brave new world begins, when all men are paid for existing and no man must pay for his sin, as surely as water will wet us, as surely as fire will burn, the gods of the copy were hideous, with terrors,