Here's how it's more expensive. You have 1000 in cash and a job. You need to buy a new car. If you can get credit you can buy a reliable used car for 10,000 and pay a reasonably low interest rate and not suffer any maintainence issues. If you have to pay cash you may not be able to even afford a car and if you find one it will likely have substantial problems which you will have to pay for in maintainence and other expenses. And then there's the soft costs of not having reliable transportation. And the same goes for apartment rentals. Bad credit means you might have to put 4 months down vs the standard 1. The increased expense isn't strictly monetary in a present value sense. Its getting an improved quality of life which will be hard when you have to pay for everything in advance.
I thought we were talking in terms of post bankruptcy? If so financing a car or renting an apartment is more expensive whether or not the person has any money at that point. But I think we are veering kinda off topic so I'll leave it there.
Post bankruptcy vs no bankruptcy. It's harder to get better jobs and it's harder to source cheaper credit (which is a lot more than just getting a credit card). and it's not completely off topic since the OP's business plan is to declare bankruptcy of his trading loses money
I agree with everything you have said from the standpoint of someone trying to do the responsible rational thing. However, if the particular individual wishes to declare BK and take all the tangible and intangible consequences of it, then there is nothing illegal about it.
Here's my 2 cents on borrowing to trade: It should be done smartly. Say you have a method that returns 8% net yearly. Borrowing to trade at 19.99% APR is dumb. Borrowing to trade at prime + 0.5 is smart. You guys are way too harsh on borrowing. How many of you bought your house in cash? Guess what a mortgage is? On BK: Depending on lifestyle, outlook, opportunities, time is much more valuable then money. Take a 20 year old trader who funds an account with 50K in CC debt at a high rate. Trader blows out and declares BK. Said trader goes overseas and does the English teacher lifestyle for a decade. Grinding it out for 2 years saving up vs immediate funding of an account is a tough choice. Trader comes back at 30 years old to the US, could be behind career wise but has potentially valuable experiences and a lifetime of memories. Not exactly game over. You guys are mostly a particular breed that thinks it's black or white. Life never is. Regardless of success one can never buy time.
Talk about dumb. A house can be foreclosed, a car repossessed. Lost trading funds ... are just that. Completely unsecured and gone. Well other than someone getting a judgement and trying to garnish wages and all kinds of other fun things. And is the reason why this trader, using the term real loosely, would think about declaring bankruptcy. Borrow money - simple. Trading - simple. If they lose, declare bankruptcy - simple. And although this is not from personal experience, thankfully, all of that is anything but simple. Some just have to learn for themselves and some will never learn.
Borrowing and trading at an interest rate of 15 to 25% is indeed insane. However, these days I can yank 25 to 45K in cash advance through balance transfers at 0% and 1% fee for a year. These are great deals if you get them, but only if your real job allows you to pay it off in a hurry if you lose the money to your trading.
I'm with you...money is dirt cheap right now. I paid a 2% transfer fee and have 0% interest for 18mos. A low threshold to make money on money that wasn't even yours. I also could pay it off tomorrow if I wanted but use it to write options making 2-3% on weeklies or 2wks out as I did writing FCX $10 puts for .47 and bought them Thursday for .07...not bad for a weeks worth of work. The key in regards to any money is where can you get most bang for your buck! Why pay down a 3% mortgage if you can invest at 5% 8% 10% return?
Last line makes sense. All the rest is nonsense. But trade away while the winning trades last. Borrowed money is still at risk no matter the cost. Trading is all about managing risk.
Hahahaha nonsense? I'm way too old to have a mom worry about my trading. I'll keep it short, not my 1st rodeo, not my 1st trade, profitable, all year, and unless I get hit with, a few black swans, should have, at least, 20% return but sadly your opinion means nothing to me. I didn't write you so that should tell you something.lol What a condescending douche...you must be a blast at parties! You must be where they got the idea for that passive aggressive commercial. Rock on Mom!