Doesn't Anyone Here Want to Be Debt Free???

**lgslgs** · 10-26-2007, 02:40 PM

We are debt free except for mortgage, but retired at age 44. Not paying off the mortgage and keeping the money to pay it off in other investments earns us over $900 per month (calculated using our most conservative rate of return on investments which is significantly lower than our historical average.)

So yes, I do agree with you about not needing new cards or credit card "rewards" and all that stuff, and that most forms of debt are best avoided. But when NOT paying off my mortgage earns me that much money I'm not about to race off and pay it. I'll keep that cash working for me in other ways and enjoy the extra investment returns as pleasant source of retirement income (that we save, not spend.)

We won't be selling this property in our lifetime so it would be silly to pay it off early if we have a low interest rate fixed mortgage and our investments earn much more than that interest rate.

Freedom for us is more wonderful when it pays us an extra $900 a month.

Lynda

**Joan.of.the.Arch** · 10-26-2007, 03:05 PM

Originally posted by FinWhiz View Post

Oh, I am sure people will post about how they "deserve" to have a new car, how they get credit card "rewards". Come on, that is like spending 10K to get 2 K in rewards. It is all to suck you in to make you think debt is normal.

Don't be a lemming-don't follow what everyone else says...don't go to bed at night owing 20K to the Credit Card Mafia!
)

Oh, wow, have you got connections for a credit card that rebates 20% of purchases?! Heck yeah, I'd put my purchases on a credit card to get $2000 out of every $10000 back! I do it now for 1-3%. Gone are the days when I got 5% back.

If I'm at the store spending $6 for a pack of socks I need, why wouldn't I want to get the 1% (6 cents) back? As certain that you are that you will never get a credit card again I am certain that I can handle my credit card responsibly and that it does not make me overspend. As a matter of fact, I'm probably one of few left who actually will darn a sock.

My policy is to pay credit cards off every month. It works.

Who is this credit card Mafia you speak of?

**LivingAlmostLarge** · 10-26-2007, 04:06 PM

LOL, I wonder how many people here are really in debt? I don't think as many lemmings as you think. Most people who are here are financially responsible.

**sweeps** · 10-26-2007, 04:57 PM

There have been a number of trolls (or at least semi-trolls) recently. Most of the regulars are very responsible with debt.

You will find a split, though, among the regulars. Some prefer to use credit cards, pay them off every month, and rack up rewards. Others prefer to avoid credit completely and stick to a strict cash or debit budget. Either way is fine.

What I personally don't have patience for is people who can't afford the basics and then make frivolous purchases such as luxury cars, 2nd homes, and vacation clubs, and then complain about how their credit is shot. When you tell them they have to make some tough choices and cut their spending and/or sell assets, they don't want any part of it.

**InDebtInDC** · 10-26-2007, 06:01 PM

I'm in debt, but I also invest heavily in my retirement. Half of my debt is student loans. The way I see it, I can always get a forebearance or even a forgiveness on my student loan, whereas no one will give me free retirement money.

I'm nowhere near being debt-free, but I knocked almost $10,000 off my debt this month.

**cantretire** · 10-26-2007, 06:04 PM

I learned a bit late, but at least I learned! I'm working to get rid of my debt as soon as possible. Just knowing that I'm making progress makes me feel great. Coming here and sharing info really helps.

I've come to the conclusion that you spend the first half of your life accumulating stuff, and the second half getting rid of it!

**scfr** · 10-26-2007, 06:25 PM

FinWhiz - I'm not sure how long you've been lurking or which threads & blogs you've been reading, but your description doesn't sound like the Saving Advice regulars I know. Many of the people here don't carry credit card debt (tho' some, myself included, use cards and pay off the balance each month). The regulars who do have credit card debt are, for the most part, working diligently to pay it off.

Many of us have no car payments, and some of us (again I include myself here and I'm certainly not the only one) have absolutely no debt at all, not even student loans or mortgages.

There have been some serious discussions about whether or not mortgages should be paid off early; I'm one who chose to pay mine off because it made sense in my situation, but I respect the fact that it doesn't suit everyone.

I would never criticize someone for having student loans. I was extremely fortunate to graduate college with zero student loans, but that was thanks to a combination of some incredible financial aid, family help, and working through college. I know that most people aren't as fortunate as I was.

Welcome to the forums; stick around; I think you'll find many people who think as you do.

**jodi** · 10-26-2007, 06:36 PM

I'm still wondering to what threads the poster is referring! I find just the opposite to be true around here for the most part. Those who do post about getting into trouble with credit are usually here to ask for help getting back on track.

**Broken Arrow** · 10-26-2007, 07:29 PM

Haha, yes, rest assured that most regulars here are fairly debt-averse. In fact, it's almost a given, and that's probably why it hasn't been mentioned as of late.

It's gotten bad enough that, on a few occasions, we also have to remind ourselves that debt can be an instrument for improvement as well. Anyone who carries a reward credit card but no balance can tell you that. Fire doesn't have to be dangerous. Used properly, it can be also a great tool for advancement.

**Joan.of.the.Arch** · 10-26-2007, 08:07 PM

Hey Sweeps, I'm not sure those folks really were trolls. They might be totally for real.

**safari** · 10-26-2007, 10:38 PM

No, I don't want to be debt free because I can use my debt to my advantage. I am getting a better return on my savings account than the interest rate on my 30 year fixed mortgage. I also have $40K credit card balance at 0% APR, and that money is earning me a couple thousand dollars a year while sitting in my savings account. I also charge all my purchases to a rewards credit card, which earns me cash back, while I am paying my balance in full every month and never paid a penny in finance charges.

**Exile** · 10-27-2007, 12:29 AM

Originally posted by safari View Post

No, I don't want to be debt free because I can use my debt to my advantage. I am getting a better return on my savings account than the interest rate on my 30 year fixed mortgage. I also have $40K credit card balance at 0% APR, and that money is earning me a couple thousand dollars a year while sitting in my savings account. I also charge all my purchases to a rewards credit card, which earns me cash back, while I am paying my balance in full every month and never paid a penny in finance charges.

Assuming that you work for a living and are not to the manor born, suppose something happens to you (termination, disability, etc.) that reduces or eliminates your earnings?

I worked as a bill collector for many years, safari, and I wish I had a nickel for debtor who was riding high with the same outlook as yours, only to see their house of cards collapse.

FinWiz is absoultely right,and to all form members, I cannot promote the book American Theocracy enough. The last third of the book about public and private debt is especially sobering.

**safari** · 10-27-2007, 02:06 AM

Originally posted by Exile View Post

Assuming that you work for a living and are not to the manor born, suppose something happens to you (termination, disability, etc.) that reduces or eliminates your earnings?

I worked as a bill collector for many years, safari, and I wish I had a nickel for debtor who was riding high with the same outlook as yours, only to see their house of cards collapse.

FinWiz is absoultely right,and to all form members, I cannot promote the book American Theocracy enough. The last third of the book about public and private debt is especially sobering.

You must have me confused with someone else. What house of cards are you talking about and which part of my original post gave you an idea that I am riding high? I don't use credit to buy things, but instead I borrow money at 0% and earn guaranteed 5.0-5.5% APY in a high yield online savings account and CD's without any risk whatsoever. I am also saving 35% of every paycheck and maxing out my 401(k). I use debt to my advantage, and I can build wealth faster by borrowing money. I can pay off 2/3 of my mortgage right now from my savings, but I choose not to. My interest rate is 5.375% and it's fixed for 30 years. I will get a better return by investing my money long term instead of paying extra toward the principal. This strategy also helps to lower my tax bill.

Now I'd like to respond to your point about a possible layoff, disability, etc. By not paying extra toward my mortgage, I am better prepared for that scenario. I can easily live a few years off my short term savings without touching my long term investments. I am in a much better position than a person who has been putting every extra penny to pay off their debts, but doesn't have much savings. If that person loses a job or gets stuck with a huge medical bill, he'll have to rack up new debt, which will have much more unfavorable interest rates, when compared to the rate he is paying on his mortgage.

There are a lot of people who cannot manage their debts responsibly, but that doesn't mean that all debts are evil. If someone cannot control their spending habits, then credit cards are not for them, but for others debt can be a valuable financial instrument, if used properly.

**Ima saver** · 10-27-2007, 05:18 AM

Well, I like others, do use my charge card and pay it off in full each month. Actually, I charge very little, but my husband uses the charge card at Home Depot to buy supplies to build. We are actually charging other people's home supplies to our card, paying it off with their money and keeping the 1-3% rewards the card earns.
I paid off my home mortgage when i was about 32 and I have never paid interest on a mortgage since.
The only thing I finance is new cars and i put down a large downpayment. I only do that to slow my husband down. He would buy a new car every 2 years if I did not finance it. He knows the old car has to be paid for before he can get a new one! (I could easily pay cash for all new cars)

Doesn't Anyone Here Want to Be Debt Free???