Debt free people chime in

[pcgeek11]

I only owe 4 more years on my mortgage and retiring for the second time when that is done. That feels pretty good to me.

 

[WelshBloke]

I only owe 4 more years on my mortgage and retiring for the second time when that is done. That feels pretty good to me.

I've got a bit to go before I can retire.

 

[turtile]

I rent and have a small loan on my car that I could pay off any time but the rate is in line with inflation so it's basically free. My rent is low enough that the cost of owning a home (utilities + taxes, maintenance etc.) would exceed what I pay in rent. My rent includes everything and if something breaks, I don't have to pay to fix it. If I want to move, I'm not stuck trying to sell a house for two years...

Even if you pay off a house, it's a liability unless you are getting rental income.

When you don't have debt or something that can bleed you cash, you can invest your money and make more money on it. And if you really want a vacation or something similar, you can do it.

 

[ladyjd]

I have no debt, but I also don't have a home and my car is 15 years old. I sometimes think I'm being stupid by not getting in debt for nicer things. I worry that inflation will end up paying for the nice homes and cars that other people have enjoyed while I've lived like a hobo to avoid going in debt. Then my cash will be worthless and I will still not have a nice house or car.

I don't really want a home though because it's just something else to worry about.

I do like the feeling I have when I realize that I don't really have to go to work.

Don't do it! Staying debt free is true freedom!


Sent from my iPhone using Tapatalk

 

[purbeast0]

I don't understand people who don't use credit cards. I've been telling my siblings and friends for YEARS how to get free money and they simply don't do it. I don't get it.

You can get thousands and thousands of dollars worth of free money in rewards without ever paying a cent of interest and going into any debt. The past 5 years I have hardly paid for any flights for my wife and myself. And if you don't like traveling, well I'm sure you like Amazon and many of these places you can convert points into Amazon GC's.

 

[olds]

Was debt free for quite a while and then decided to buy a new car. It's almost paid off though.
It's a good feeling and you can save more for retirement.

 

[highland145]

You aren't retired yet? Damn octogenarians ruining the economy for young people.

 

[dullard]

Being debt free is easy, it just takes time. The key is to spend less than you earn. My philosophy: I can buy anything I want, any time I want, because I don't.

My path to being debt free was dull.
1) I paid ~$700 more per month on my mortgage than was required for 5 years.
2) My fiancé did about the same for about 4 years.
3) By the time we married, we both had ~40% of each the house paid off.
4) Sold one house days before we got married, put that 40% into the other house, and we were just about fully debt free.
5) Sold some investments a couple months later to finish it off.
6) Driving every car for 10 years and getting a good deal on college tuition helped.

Being fully debt free in our early 30s didn't really change our lives. We were never big spenders to begin with. But I can say for sure that paying down a $150k house feels infinitely better than gaining $150k in investments. Infinitely. The peace of mind of being debt free is far more valuable than having debt and more junk or debt and more stocks.

If we both lost our jobs forever, all we have to worry about now is putting food on the table and some misc. property taxes. So, the one way we did change is we started volunteering and donating to the needy. If our biggest possible fear is not having food, why not use our extra cash to help those who truly don't have enough food.

 

[monkeydelmagico]

I don't understand people who don't use credit cards. I've been telling my siblings and friends for YEARS how to get free money and they simply don't do it. I don't get it..

Not really debt if you are paying in full. More like float. I'm typically 45 days of float without accruing any real debt or interest. Using a points/reward card to pay for anything and everything I can, then making a payment by check allows me to hold on to my money longer. This generates interest. The rewards/points are a bonus.

On average, my cash back card pays me $30.- per month to use it. I also earn a nominal interest rate for the 30+ days I keep the money owed to them. It all falls apart if I allow the balance to carry or miss a payment. The interest charge for one month will erase nearly a years worth of cash back. Take a good look at your siblings and friends. Do they have the financial discipline to make such a strategy pay?

 

[Bird222]

I don't understand people who don't use credit cards. I've been telling my siblings and friends for YEARS how to get free money and they simply don't do it. I don't get it.

You can get thousands and thousands of dollars worth of free money in rewards without ever paying a cent of interest and going into any debt. The past 5 years I have hardly paid for any flights for my wife and myself. And if you don't like traveling, well I'm sure you like Amazon and many of these places you can convert points into Amazon GC's.

What are the best rewards cards? BTW, I'm debt free but I don't count because I'm a renter.

 

[Imp]

Being fully debt free in our early 30s didn't really change our lives. We were never big spenders to begin with. But I can say for sure that paying down a $150k house feels infinitely better than gaining $150k in investments. Infinitely. The peace of mind of being debt free is far more valuable than having debt and more junk or debt and more stocks.

*Sign* Where I live, $150k would only get me a condo in a former crackhouse/brothel -- I'm not kidding, I found stuff about the building on a forum or two and it used to be a hotel with a floor devoted to prostitutes. It also had a parking garage out back with abandoned cars ("dumped") and where people went to shoot up.

 

[purbeast0]

What are the best rewards cards? BTW, I'm debt free but I don't count because I'm a renter.

Right now, IMO, the best ones if you have a SO is the southwest one because you can get a companion pass pretty easily by getting 2 of the southwest cards that have 50k bonuses on them. That's also only good if you fly national and don't mind southwest.

Other than that, the Chase Sapphire card or the United cards are the best ones IMO. The Sapphire card is good because you can transfer points 1:1 to United, and using points on United is A LOT better than using points to book directly through rewards.

As for non-travel rewards I really am not to sure though.

 

[TheVrolok]

If it makes you feel better my sister and her husband are 1.085mil in the hole thereabouts. Between med school, pharmacy school, and a house from 2007 in bubbletopia suburbia that they refuse to sell at a loss so why not get a new $500k one built that actually suits their needs because who needs to retire at 95 anyway. amirite?

Their lifestyle would give me anxiety.

Yeah, my wife and I will probably be looking at similar debt after we buy a house. It's intimidating. Our car loans will be done in 3 years and then student loans another 3.5-4 after that. So in 7 we'll just have the house (hopefully), but it's still quite a long road.

 

[dullard]

*Sign* Where I live, $150k would only get me a condo in a former crackhouse/brothel -- I'm not kidding, I found stuff about the building on a forum or two and it used to be a hotel with a floor devoted to prostitutes. It also had a parking garage out back with abandoned cars ("dumped") and where people went to shoot up.

Since the vast majority of your posts here that I see are complaining about your housing costs, have you considered moving to where housing is a sane price?

 

[DeathReborn]

Well the big ticket items:
Education - Joined the Royal Navy and went to university through them, got paid to learn and did my return of service plus a bit extra.
Home - I rent while I save to buy a house outright, only another 4 years to go at my current saving rate (~£250k).
Car - Bought outright.
Bike - Labour of love for ~11 years, vintage Triumph with all original parts is quite expensive.

I do earn a good wage and while I do have 2 credit cards, they are both Pre-Paid cards, one being for foreign currency. I have never had to take out a loan or use a traditional credit card and probably never will.

 

[Imp]

Since the vast majority of your posts here that I see are complaining about your housing costs, have you considered moving to where housing is a sane price?

That's one of the perks of being among the few participants in the stock thread.

 

[s0me0nesmind1]

Being "Debt Free" in a sense should be your last concern.

You should be WAY more concerned with retirement funds a million times over. The market generally accrues 6% interest - on top of that, they are tax advantage accounts. Whereas, paying off your debt is taxed in full, and the most you save is your interest APR. Currently my APR can't get any lower at 2.75%.... So.... 2.75% vs. ~6%. Which do you think is better? Don't get me wrong though, I put a little extra towards principle every month, but my first priority is maxing out my 401k and Roth IRAs

I have funds stored away (mostly in retirement, some in savings) for a rainy day if shit were to occur. I can handle any major crisis. I have the leverage to walk away from the loan as well. Imagine if all of a sudden your home was near worthless due to rising sea levels or if oil companies decided to do fracking next door and cause earthquakes every day? Your house would be worth less than what you owe.

 

[Uppsala9496]

Not 100% debt free, but as close as I can be. Have a mortgage with 50% equity. Plan on having that paid off in 14 more years. At 3.75% interest, don't really see a reason to go crazy and pay it off any quicker than I am.
Cars are both paid for and newer (2015 and 2014) so don't need to worry about that.
The only outstanding bill aside from the mortgage is about $4,000 with a furniture company at 0% interest that I can use a credit card to pay for each month. So I earn miles paying off a 0% debt. Absolutely no reason to pay that off early.

 

[ponyo]

Being "Debt Free" in a sense should be your last concern.

You should be WAY more concerned with retirement funds a million times over. The market generally accrues 6% interest - on top of that, they are tax advantage accounts. Whereas, paying off your debt is taxed in full, and the most you save is your interest APR. Currently my APR can't get any lower at 2.75%.... So.... 2.75% vs. ~6%. Which do you think is better? Don't get me wrong though, I put a little extra towards principle every month, but my first priority is maxing out my 401k and Roth IRAs

I have funds stored away (mostly in retirement, some in savings) for a rainy day if shit were to occur. I can handle any major crisis. I have the leverage to walk away from the loan as well. Imagine if all of a sudden your home was near worthless due to rising sea levels or if oil companies decided to do fracking next door and cause earthquakes every day? Your house would be worth less than what you owe.

Debt free or people who hate debt are savers and they already max out their retirement or they can't contribute because they make too much money. If you're not paying off your home loan early because you want leverage over the bank to walk away, I don't know what to tell you. People tell all kind of things to help them feel better about themselves or their situation.

 

[Tweak155]

Debt free or people who hate debt are savers and they already max out their retirement or they can't contribute because they make too much money. If you're not paying off your home loan early because you want leverage over the bank to walk away, I don't know what to tell you. People tell all kind of things to help them feel better about themselves or their situation.

Lots of people have no qualms with making their choices other people's problems.

 

[edro]

Yes, I have property tax but it's about $1250/year for the house, 2 vehicles and another 8 ac piece.

What?! Do you live in a cardboard box?

 

[highland145]

Heh, no. I live in S.C. Granted there are some higher taxed areas but this isn't one of them, relatively speaking. Columbia, Greenville, Charleston are probably pretty high but they're not NY high. Homeowners don't pay the school tax which would be ~$500 more in my case. The school tax is on the vehicles and rental properties.

I also get a break because we paid $75K for the house in 1995 and the taxable amount can only go up 5% every 5 years ( I think) regardless of the actual value. I think we're at ~$225 actual value now.

The tax for the company truck just came in today, $535. That's not in the $1250 I posted.

 

[OverVolt]

Being "Debt Free" in a sense should be your last concern.

You should be WAY more concerned with retirement funds a million times over. The market generally accrues 6% interest - on top of that, they are tax advantage accounts. Whereas, paying off your debt is taxed in full, and the most you save is your interest APR. Currently my APR can't get any lower at 2.75%.... So.... 2.75% vs. ~6%. Which do you think is better? Don't get me wrong though, I put a little extra towards principle every month, but my first priority is maxing out my 401k and Roth IRAs

I have funds stored away (mostly in retirement, some in savings) for a rainy day if shit were to occur. I can handle any major crisis. I have the leverage to walk away from the loan as well. Imagine if all of a sudden your home was near worthless due to rising sea levels or if oil companies decided to do fracking next door and cause earthquakes every day? Your house would be worth less than what you owe.

It means a great depression is inevitable within a young persons lifetime because no one will be able to accrue enough to retire with such low interest rates. You used to get 5% on a frickin savings account. The people who DO save ARE going to be the ones who can retire with ease, but it implies that going forward there is going to be some kind of deflation event. Ain't nobody able to retire on 2.5% interest bonds or a 6% stock market. The stock market at 6% loses its compounding effect from down markets unlike bonds.

To me this is implying some kind of major deflation event in my lifetime.

You do not want large outstanding principles while heading into low inflation or deflation.

 

[desy]

I was just about debt free when I inherited about the same as my net worth at the time. My kids are going to get about 10% of my NW once they graduate HS and at age 21.
As someone who started with nothing after graduating college I would have appreciated the leg up I can afford to give my kids and start them off debt free.
If I've taught them well they can sustain it.
I love being debt free, the end of the month shows up and its never a worry as ti if there is enough.

 

[TwiceOver]

A friend of mine received an inheritance back in 2006. He didn't really have any idea what to do with it and we were discussing it over beers. I told him to pay off his house because there's "nothing more powerful than being able to walk away from your job whenever you want". He gave me a "yeah man I hear ya" and then proceeded to invest it in retirement because his schlub "advisor" said he could make more in the market than his 5% mortgage. Spent some on toys.

Market crashed, he lost his job. Still has his house, but not much left of his retirement. Without a house payment he could have worked at McD's and lived perfectly fine.