No, taking out loans for things is spending (usually because you want to spend more than you have and/or earn). To be more accurate, taking out the loan is not spending, it's the spending implied by "for things" that makes it spending. Paying loans back is saving (in that it increases your net worth).

A person who is now paying back a loan (positive savings rate) at one point must have spent more than they earned (negative savings rate), that doesn't change the fact that they currently have a certain savings rate. If I had a 50% savings rate last year, that doesn't change the fact that I have a 70% savings rate this year and that it's therefore possible to save that much on my income. Just the same, the fact that I had a -50% savings rate last year (took out a loan and spent it) doesn't change the fact that I have a +50% savings rate this year (paid the loan back).

Now, of course, you need to look at someone's lifetime or average savings rate to know whether they'll be able to retire or not, but that's a different question. It doesn't change the fact that someone paying back a loan is spending less than they earn thereby increasing their net worth and proving that it's possible to save a given amount on a given income.

Here's a question for you: has Person A or Person B earned more money over this period of time? Here's a hint for you "Person B works throughout college and pays as he goes. Or, alternatively, Person B’s parents pay for college." So one way or another Person B had an extra $96,000 inflow of cash that Person A didn't have. You should expect Person B to have (at least) an extra $96,000 at the end of the time frame.Jags4186 wrote: ↑Wed May 16, 2018 1:47 pmPerson A borrows $96,000 to go earn a Bachelors Degree. Upon graduating from college Person A makes $4000/mo, spends $2000 to live and pays the $2000/mo for 4 years clearing the loan. After 4 years he has $0.

Person B works throughout college and pays as he goes. Or, alternatively, Person B’s parents pay for college. He graduates with no debt. Person B also makes $4000/mo and puts $2000/mo into his savings account. After 4 years he has $96,000.

Person A borrows $96,000 (neither spending nor saving) to go earn a Bachelors Degree (spends the money on a degree). Upon graduating from college Person A makes $4000/mo (earns money), spends $2000 (spends money) to live and pays the $2000/mo for 4 years clearing the loan (saves money). After 4 years he has $0 (has no savings). Total Earning: $192,000, total spending: $192,000, total saving: $0. Person A had an average 0% savings rate on $192,000 total income.

Person B works throughout college (earns money) and pays as he goes (spends money). Or, alternatively, Person B’s parents pay for college ("earns" money). He graduates with no debt. Person B also makes $4000/mo (earns money) and puts $2000/mo into his savings account (saves money). After 4 years he has $96,000 (has savings). Total earning: $288,000, total spending: $192,000, total saving: $96,000. Person B has an average 33.33% savings rate on $288,000 total income.

If you want to compare savings rates you need to compare earnings, not just spending.