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

[Ima saver]

Yes, I noticed.

[boefixepa]

I think he finally realized he wasn't going to make us change our minds, thanks for fighting the battle for me....been out of town this last week.

Being unfrugal in Malta....Italy, Cicili, then a little island called Malta. Tagged along with hubby on a work trip...really all we paid for was the tick $1,200 and my spending money....cheepest trip to Europe I've been on....aahh the joys of having money to spend on things we want.

Ima loves her cars and eating out...I think it's disney steve who loves his vacations.....now this is living....someday I'll get there

[disneysteve]

I think it's disney steve who loves his vacations

Yep, that would be me. Leaving for Disney World on Friday.

Glad you had a great time in Italy.

[Scanner]

I joined this discussion late but I think there is a psychological element of not wanting to be in debt.

Many people hate the thought of oweing anything to anybody. It's a value they are raised with and I think it can work to their detriment.

I owe a lot to my parents, probably never be able to repay them.

I owed a lot to BanK One, for financing my education. I paid them back.

I owed a debt to Bank of America, for giving my start in business. I still owe them a little.

I owe Washington Mutual, for the chance at owning a home.

I am happy to pay them interest for the things they gave me and I hope the business arrangement has been mutually profitable.

See, here's the thing - it nobody borrows, then nobody saves.

The fact that you guys earn 4% on your savings accounts at ING and stuff. . .well, the only way that can happen is for the bank to loan me the money at 8% to start my business. The 4% differential is how the bank makes money. They are stewards of that money.

I"m not sure how debt got pigeon-holed into being evil.

Have a great time in Disney.

[disneysteve]

The fact that you guys earn 4% on your savings accounts at ING and stuff. . .well, the only way that can happen is for the bank to loan me the money at 8% to start my business. The 4% differential is how the bank makes money. They are stewards of that money.

I"m not sure how debt got pigeon-holed into being evil.

That's a great point that we often forget about. Debt and savings are two sides of the same coin.

I think some of the negative connotation of debt came in the past couple of decades as lenders made it easier and easier to get into debt and to live beyond your means. When I was in college (1982-86), my friends and I used to go to the mall and apply for credit cards at every department store because they would give you a free gift for applying - an umbrella, a calculator, etc. We all knew there was no chance at all that we'd be approved because we had no job, no income and no money. Back then, in order to borrow money, you had to prove that you had the means to repay it.

That is no longer the case. Today, college students are flooded with credit card offers. No job, no money... no problem! Buying a house? Forget about that 28% debt rule, 20% down or 3 times your income limit. Today, people are routinely buying homes for 5-6 times their income, putting 5% or less down and creating housing costs that approach 50% of their income or more. This is what has made debt seem like a bad thing to so many people.

I'm with you, Scanner. If not for debt, I wouldn't own my home. If not for debt, I wouldn't have my college degree, my medical degree and my career. If not for debt, I wouldn't have my current car (though I'll probably buy the next one with cash). Debt isn't bad just like credit cards aren't evil. It is how people use/abuse debt and credit cards that can be bad.

[simpleyme]

my want is not to be debt free alone but to well off financially and eliminating debt has allowed that, so just being debt free is not all that great

a homeless guy with no job can be debt free

I am a huge Ramsey fan ,but I am unimpressed by people who sell everything they own and declare them selves debt free ,that is the easy way out , and if you are just going to get the stuff again it is pointless

I have all the real estate I need so when I pay off this house I really will be debt free and I see no point in borrowing small sums of money anymore If I only paid 13 K for my last new car because I could not bear to part with any more of my money than that ,31 K cars are not so attractive when you write a check ;-)

I think it sorta depends on where you are in life at some point no more debt is needed

[FinWhiz]

FinWhiz, let me guess you probably are a DR follower with a 6 month EF. And let's say you get disabled or cancer. Can't work for 1 year. What will you do? YOU have to get a job within 6 months or start stretching it, but it could be hard to last 1 year. Let's 50% of it is gone to medical bills, how long will you be keeping your house? Will you touch your retirement savings?

No, I am not.
I have health insurance, and disability insurance.
The kind of work I do I can do anywhere.
I owe less than 25K on the house, and it is worth 455K.
I have money saved for retirement, and will also have a sizeable inheritance if something were to happen to my father.

I find it interesting that many posters on here assume I am broke. They also assume I am male. Interesting.

[FinWhiz]

Has anyone else noticed that OP FinWhiz hasn't been heard from for a couple of days?

Sorry, I have been a little busy.

[mariogreymist]

I find it interesting that many posters on here assume I am broke. They also assume I am male. Interesting.

What I think you ought to find more interesting is that almost all posters here think you are an arrogant, self-righteous twit.

[Ima saver]

Glad you are back. Finwhiz just sounds like a guy sounding name.

[LivingAlmostLarge]

Finwhiz so how much have you got saved for retirement and in taxable accounts? I think it's horrible to count on an inheritance. Anyway do you think you could outlive the average saver here on Savingadvice? Not the ones who come here for debt advice but those who owe only a mortgage?

[vsjhoc]

I ... will also have a sizeable inheritance if something were to happen to my father.

5 Reasons Why You Should Never Count on an Inheritance As Part of Your Financial Planning

1. Dad may not have a will.

2. Dad may have a will, but you're not a beneficiary (surprise!).

3. You may be a beneficiary, but someone else may challenge the will. A legal challenge will be expensive for you -- and you might lose.

4. Dad may spend down his estate in his sunset years and not leave such a "sizeable" inheritance to you (and why should he? Presumably he worked hard for that money, he should get the chance to enjoy it, and he has no obligation to leave it to you).

5. Probate costs may eat up whatever portion of the estate you'd be entitled to.

ETA: See later post for reasons # 6 and 7.

[Broken Arrow]

I think it's rude to consider any inheritance from your parents while they are still alive.

It's not that I think the practice of learning estate planning and managing a windfall is a bad thing per se.

It's just not cool to expect it when they are still alive and liable to change their minds.

[vsjhoc]

Right, I forgot #6 and #7:

6. You may be a beneficiary now, but Dad may change his mind.

7. It's tacky.

[mariogreymist]

My mother speaks frankly about leaving money to my brother and me. It's different from family to family. It is the general concensus in our family to keep these issues above board. My parents paid for a major debt my brother incurred in his mis-spent youth, and the debt was built into the will. This was discussed at the time because previously they'd told us the will was 50-50. My mother's parents had the same discussion with their three kids. I expect that I will do the same if ever I have children. Who wants to think their heirs will fight over money?