Strange China markets and debt

It has been a strange beginning of the new year in the financial markets. China crashed a bit, and then the trading was suspended. And it happened again. Then as quick as the rule was implemented. It was withdrawn again.

The worries about the Chinese economy, and with that the rest of the world maybe justified. I don’t know. What I do know is a lot of the trading in China is more gambling than anything else. A lot of people borrow money to speculate rather then invest. And if the market doesn’t go your way the need to sell fast is much higher with borrowed money. So it may not even be a problem of the ‘real’ economy but more a problem of gambling with borrowed money. But it could mean a debt problem in the near future. Which will slow the ‘real’ economy.

Debt in all forms is bad, in my opinion. If you can’t afford something, simply don’t buy it. The only exception being to buy a house. And even then it’s very much advisable not to overspend on a house.

A lot of people are always talking about the beauty of compounding interest. Well buy simply paying off all your debt , you will save a lot of money on interest payments which you can then save or allocate to other useful goals. It creates space in your monthly budget. If you have debt and are thinking about investing in any shape way or form. Just keep it simple and start by paying off your debt. It might sound boring but it works like nothing else.