NationStates Jolt Archive

http://money.aol.com/smoney/credit/canvas3/_a/being-debt-free-isnt-alwaysall-its/20070223120309990001

I've been in debt most of my adult life. I hated it. Now that I'm out of debt, they're telling me I should be in debt. I don't think so. I own my own home - no mortgage. I own my car - no payments. No credit cards. I feel like I've lost a ton. Maybe the only way to get where I am is throught debt, but I can't help thinking that there could be a better way. There was a time when you could actually save enough money to buy things like cars and houses and hold them free and clear, precisely because you didn't have monthly credit card payments.

Should we go back? Or is debt the way to go?

What I would suggest doing is carrying a balance on a credit card. Pay it off every 3rd month or so then repeat. What happens with people in your situation is that you end up paying a higher interest rate because you like to be free and clear. It isn't that they think your a credit risk. You are just getting penalized because they know your going to pay down your debts quick.

The whole credit system is a scam in the US. I think it should be regulated to a degree.

http://money.aol.com/smoney/credit/canvas3/_a/being-debt-free-isnt-alwaysall-its/20070223120309990001

I've been in debt most of my adult life. I hated it. Now that I'm out of debt, they're telling me I should be in debt. I don't think so. I own my own home - no mortgage. I own my car - no payments. No credit cards. I feel like I've lost a ton. Maybe the only way to get where I am is throught debt, but I can't help thinking that there could be a better way. There was a time when you could actually save enough money to buy things like cars and houses and hold them free and clear, precisely because you didn't have monthly credit card payments.

Should we go back? Or is debt the way to go?
I hate being in debt. I never really were and I sorta, on my little fantasy cloud, hope I never will, but eh, come the time of buying an apartment/house or something like that and that will obviously not really be possible anymore.

I very much like the way most (maybe all, I don't actually know) credit cards work here (Germany) - you pay for stuff with the card, then the big bill for all you bought comes once a month and then it's billed to your checking account.
I don't really think we have the kind of credit cards you guys have in the US, where you can put assloads of debt on a card (someone please correct me if I'm wrong).
So the obvious disadvantage is that a credit card is not a replacement for a regular bank credit but really just a glorified debit card with the nice perk that the money is only deducted from your account once a month instead of immediately.
The obvious advantage, however, is that it's not possible to fall into the trap of ruinous credit card debt.

So yeah, I would try to go without debt as much as possible - if only because it would irk me to no end to be paying interest to the stupid bank on top of all the money I'd have to pay them back in the first place.

But then I've been terribly sheltered and financially secure so far, so what do I know?


Edit: In my defense, I'm also just generally rather responsible when it comes to spending money, so even the few times my checking account was overdrawn I *hated* it (mainly, again, because of the pesky interest) and balanced it out again as fast as possible.
My sister on the other hand probably hasn't seen a month without overdrawing for about as long as she can remember.
I blame it on me being a boring Taurus. :p

I hate being in debt. I never really were and I sorta, on my little fantasy cloud, hope I never will, but eh, come the time of buying an apartment/house or something like that and that will obviously not really be possible anymore.

I very much like the way most (maybe all, I don't actually know) credit cards work here (Germany) - you pay for stuff with the card, then the big bill for all you bought comes once a month and then it's billed to your checking account.
I don't really think we have the kind of credit cards you guys have in the US, where you can put assloads of debt on a card (someone please correct me if I'm wrong).
So the obvious disadvantage is that a credit card is not a replacement for a regular bank credit but really just a glorified debit card with the nice perk that the money is only deducted from your account once a month instead of immediately.


We have the massively in debt cards as you say. But if you get carried away with it your going to be in trouble. The card you describe in Germany that you use sounds like what an "American Express" card is in the US. The Amex runs in that same principle.

We have the massively in debt cards as you say. But if you get carried away with it your going to be in trouble. Yeah, but from what I've read you can get really carried away before the trouble sets in, especially because people spread their debt over several credit cards. Which is kind of charming when it's the first-time filmmaker financing his award winning debut by putting huge debts on half a dozen cards, but decidedly less charming when it's average people ruining their lives with it.

The card you describe in Germany that you use sounds like what an "American Express" card is in the US. The Amex runs in that same principle.Ah, I didn't actually know that. I always thought American Express was just another credit card company, like VISA and Master Card, didn't know they operated differently. Learn something new every day. :)

My credit card company has yet to charge me interest, probably because I pay it as soon as I get my statement. Credit cards tend to have some ridiculous interest rate like 19%. I am debt-free and I would love to stay that way. Although, that's not likely to be possible unless I live with a parent until I can afford a house or condominium.

I blame it on me being a boring Taurus. :p

We Tauruses aren't boring. We're dependable. Not that I believe in any of that mumbo jumbo... anyway, credit cards are the devil. The only reason I have one is because it's free and because it has a low €1000 limit, and I only use it to buy things I know I'll be able to afford to pay for at once at the end of the month when the bill comes, thus evading interest.

We Tauruses aren't boring. We're dependable. Not that I believe in any of that mumbo jumbo...
Right.

<.<

i hate being in debt. i always get really stressed out when i get within maybe £100 pounds of my overdraft limit. i'm probabaly within that now actually, but the stress isn't showing as more than a blip over the stress i'm already feeling over uni. got an email the other day saying i was gunna get kicked out cuz my mum had forgotten to pay my fees so that scared me, along with the perpetual fear of the impending dissertation deadline. i'm just glad i'm not eligible for student loans cuz then i would be absolutely screwed.

They should be more willing to give you a loan because you've had no debt. If you can manage your finances that well, you can't be that high-risk.

As it stands, I'm twenty-one and I have nothing but savings, through a combination of hard work in employment and in school I have managed to acquire sufficient scholarships and personal funds to be able to cover my fees here at OSU.

I will be getting a credit card rather soon, mainly due to the fact that I will be spending the next several months in Washington, DC. I will be in an unpaid internship for two and a half months, and I will be needing to have access to greater resources than normal. With great reluctance I take on a credit card.

Fortunately, I intend to spend next to nothing. I'm cheap as hell. Luxuries in my world consist of a slowly developing library of used books.

It's a tragedy that we have to actually be in debt in order to show that we can pay off our debts.

They should be more willing to give you a loan because you've had no debt. If you can manage your finances that well, you can't be that high-risk.

if she needs credit for something, she should find a bank that will look at her actual credit history and not her FICO score, the only way to have a good FICO score is to be perpetually in debt.

You don't really need to borrow money for anything, provided you save, which isn't the "cool" thing to do these days.

I very much like the way most (maybe all, I don't actually know) credit cards work here (Germany) - you pay for stuff with the card, then the big bill for all you bought comes once a month and then it's billed to your checking account.

I don't really think we have the kind of credit cards you guys have in the US, where you can put assloads of debt on a card (someone please correct me if I'm wrong).

So the obvious disadvantage is that a credit card is not a replacement for a regular bank credit but really just a glorified debit card with the nice perk that the money is only deducted from your account once a month instead of immediately.

The obvious advantage, however, is that it's not possible to fall into the trap of ruinous credit card debt.

:confused:
Well, its not like you are being charged interest immediately after a purchase in a regular credit card (they do that for ATM withdrawals using credit card though). Usually you get a monthly bill with 10 to 20 days time to pay the amount. If you link the card's autopay to your checking account, then the monthly balance will be deducted only once a month.

The problem is when somebody goes on a shopping spree and buys stuff for 1000 dollars has only 500 to pay and puts the rest on interest. Does this again for a few more months and you are caught in the debt trap where you make only enough to pay the minimum balances and you have a hard time bringing down the original to manageable levels.

I am pretty decent with credit, but I do have a weakness for going for new cards because I like the rewards program. :(

if she needs credit for something, she should find a bank that will look at her actual credit history and not her FICO score, the only way to have a good FICO score is to be perpetually in debt.


FICO scores are crap. I pay off full amounts and never carry balances and I have never defaulted on anything and my score is only 640. My friend carries like $5000 on cards and he is 700+ :mad:

What was really irritating was that I needed to get a cosigner for my lease next year, as I have zero credit history. Not bad, not good. Zero.

That also factored into my decision to spring for a card.

My family and I are just keeping our heads above water debt wise. And I mean my nose is just sticking out and I bob a little. Due to mitigating circumstances however, w/i the next 2-3 months we will be completely debt free and financially stable. Mortgage, CC's, student loan, all gone.

Thank goddess.

We Tauruses aren't boring. We're dependable. Not that I believe in any of that mumbo jumbo... anyway, credit cards are the devil. The only reason I have one is because it's free and because it has a low €1000 limit, and I only use it to buy things I know I'll be able to afford to pay for at once at the end of the month when the bill comes, thus evading interest.


I also here that us Taurii (my word) are hard headed, with short tempers, but we are also rather good in bed ;)

I also here that us Taurii (my word) are hard headed, with short tempers, but we are also rather good in bed ;)

Yeah, but do you really want to wake up to a cow in the morning?

Yeah, but do you really want to wake up to a cow in the morning?

Damn...you beat me there...

Damn...you beat me there...

:fluffle:

I had wanted to avoid following the masses and stay debt free for life. I would've had no shame about living in a small apartment and driving a car that's ten years old. Now I've taken out student loans because there was no way in hell my parents could afford anything beyond community college. God, where am I going to be in twenty years if DigiPen turns out to be crap. . .

Should we go back? Or is debt the way to go?

There is no argument that will ever convince me that being in debt is better than not being in debt.

The whole credit system is a scam in the US.

I tend to agree.

anyway, credit cards are the devil. The only reason I have one is because it's free and because it has a low €1000 limit, and I only use it to buy things I know I'll be able to afford to pay for at once at the end of the month when the bill comes, thus evading interest.
That's what I was doing when I first got a card. You have to be careful though - it's very easy to get into credit card debt and with their charges almost impossible to extracate oneself.
The sods are devious too - they usually raise your limit without first consulting you about it. They know ppl invariably spend up to their limits, so the higher the limit, the more interest they make off you.

I was paying it off every month, so not getting hit with any interest charges - until my grandfather died. Having only a p/t job and just covering the basics as I was at that time, I had no spare cash. I used my card to get myself down for his funeral - and then spent the better part of the next 3 years in card debt.

Card debt is like the mob - once you're in, it's almost impossible to get out.


my g/f has a big card debt - close to $5000US. She can barely cover the interest payments each month - and this is where they get you. She could take out a loan at a much lower rate of interest to pay her card back, but the monthly repayments would be well above what she can afford. So she's stuck with this debt which is costing her nearly $1000US a year just in interest.

if she needs credit for something, she should find a bank that will look at her actual credit history and not her FICO score, the only way to have a good FICO score is to be perpetually in debt.

You don't really need to borrow money for anything, provided you save, which isn't the "cool" thing to do these days.
my g/f has a big card debt - close to $5000US. She can barely cover the interest payments each month - and this is where they get you. She could take out a loan at a much lower rate of interest to pay her card back, but the monthly repayments would be well above what she can afford. So she's stuck with this debt which is costing her nearly $1000US a year just in interest.
Gah, even reading about that is getting me all angry.



:confused:
Well, its not like you are being charged interest immediately after a purchase in a regular credit card (they do that for ATM withdrawals using credit card though). Usually you get a monthly bill with 10 to 20 days time to pay the amount. If you link the card's autopay to your checking account, then the monthly balance will be deducted only once a month.No, you misunderstood me. I was saying the monthly bill was a perk compared to a debit card, where every purchase is deducted from your account the next day.

Oh, and I wasn't talking about interest here at all, since it's simply not involved in this unless your checking account is empty when the monthly credit card bill comes...

You don't really need to borrow money for anything, provided you save, which isn't the "cool" thing to do these days.

With the exception of houses, unless you're stupidly rich, because paying rent + saving enough for a house is not possible. Even if I saved every spare penny I had I'd still save slower than house prices increase.

I've no debts that count. I have student loans, of course (praise be our "socialist" overlords :rolleyes: ) weighing in at £15k or so, but they'll probably never be paid off. And they pay me not to repay them, there's no penalty for not repaying (they vanish when I hit a certain age or die), and they only take 9% of your income over £15k pa to repay them (which is more than I earn), so who cares?

With the exception of houses, unless you're stupidly rich, because paying rent + saving enough for a house is not possible. Even if I saved every spare penny I had I'd still save slower than house prices increase.
yes, with the exception of a house, but you should still borrow smart when buying a house.

yes, with the exception of a house, but you should still borrow smart when buying a house.

I don't see the point in buying a house. I am debt free and have been all my life. The way house prices are in the U.K at the moment means I won't even think about buying. The house my parents bought in 1997 was around £50,000 (3 bedrooms, 3 reception rooms, new kitchen, detatched garage, front & rear gardens, near 2 very good schools). The house I now rent is valued at about £110,000 (2 bedroom terraced, 2 reception rooms, no front garden or garage and small yard to rear). The rent I pay is brilliant and all electrical/gas/structural repairs are done at no cost to me. debt free is the way to be.

yes, with the exception of a house, but you should still borrow smart when buying a house.

Of course!
You should shop around and be careful when buying anything, be it a £10 book or a £200,000 house.

I have no desire for credit to begin with, nor do I have any savings within the bank. I'm a gold owner, I have no need for the banking system's nonsense.

With the exception of houses, unless you're stupidly rich, because paying rent + saving enough for a house is not possible. Even if I saved every spare penny I had I'd still save slower than house prices increase.

Or you can always just marry well. Lots of single folk out there who already own their homes. :D

I don't see the point in buying a house. I am debt free and have been all my life. The way house prices are in the U.K at the moment means I won't even think about buying. The house my parents bought in 1997 was around £50,000 (3 bedrooms, 3 reception rooms, new kitchen, detatched garage, front & rear gardens, near 2 very good schools). The house I now rent is valued at about £110,000 (2 bedroom terraced, 2 reception rooms, no front garden or garage and small yard to rear). The rent I pay is brilliant and all electrical/gas/structural repairs are done at no cost to me. debt free is the way to be.

whether or not buying a house is a good investment depends on your motivation, the housing market, your goals, etc.

whether or not buying a house is a good investment depends on your motivation, the housing market, your goals, etc.

In England the housing market is the main reason not to buy. Buying a house now here in the U.K would probably be a bad investment. I remember looking through the housing section of the local paper when I was about 13 and seeing an 8 bedroom victorian mansion for sale with 4 acres of land at a price of £495,000. In Ormskirk you can get a five bedroom 'executive property' (newlybuilt and therefore probably not as good quality) for around £1,200,000. If your motivation is to have somewhere to live, rent and wait until the reposesions start. If your goal is to be blacklisted from mortgage lenders for five years, borrow 5 times your income and wait for the bank to forclose.

I tried to buy some land a year or so ago, asking price was $30k, I had 10,000 in cash, and another 10k in collateral, no one would lend me money. I wasn't in debt, hadn't ever been in debt really. I mean I had my pickup, which I'd never been late on a payment on, but because I'd never racked up credit card bills I wasn't able to get a loan.


The credit system in this country is seriously fucked up.

If you own your own home and have no other debts. I do not think that there is much need for a credit card other than to make small purchases and pay them off right away. If a large loan is needed to buy a car one can always get a Home Equity Loan. HELs are great because the interest is tax deductible.

I think a credit card is a convenient way to make small occasional purchases like buying gasoline for your car.

I tried to buy some land a year or so ago, asking price was $30k, I had 10,000 in cash, and another 10k in collateral, no one would lend me money. I wasn't in debt, hadn't ever been in debt really. I mean I had my pickup, which I'd never been late on a payment on, but because I'd never racked up credit card bills I wasn't able to get a loan.


The credit system in this country is seriously fucked up.
The more I read about things like that, the more I agree. Scary.

I have no desire for credit to begin with, nor do I have any savings within the bank. I'm a gold owner, I have no need for the banking system's nonsense.

This is a strange position. Gold is a fairly volatile thing to own and it is not nearly as liquid as cash.

Many people are gold owners, stock owners, REIT owners, etc. but they still have need for banks. When you pay your phone bill it isnt like it is very smart to send the phone company a small gold nugget. Instead you send them a check.

Ever notice how economic discussions here have a lot less activity than stuff about queers or abortions? I think this is fascinating and much more fresh than the 1,000,000th gay thread. Yet those things get like 25+ pages of discussion and this gets 3 or 4 so far. What gives?

Ever notice how economic discussions here have a lot less activity than stuff about queers or abortions? I think this is fascinating and much more fresh than the 1,000,000th gay thread. Yet those things get like 25+ pages of discussion and this gets 3 or 4 so far. What gives?

If I had to guess, I would say thread de-railing in those threads.

My family and I are just keeping our heads above water debt wise. And I mean my nose is just sticking out and I bob a little. Due to mitigating circumstances however, w/i the next 2-3 months we will be completely debt free and financially stable. Mortgage, CC's, student loan, all gone.

Thank goddess.

Wow. It is amazing that you can go from serious woes to ok in such a short period of time. Will you be using a banruptcy?

Ever notice how economic discussions here have a lot less activity than stuff about queers or abortions? I think this is fascinating and much more fresh than the 1,000,000th gay thread. Yet those things get like 25+ pages of discussion and this gets 3 or 4 so far. What gives?
I think it's just a combination of the majority of NS'ers being either too young to need to worry about where their money comes from, students who are too broke to care or the few older ones who don't wish to be reminded of how perilous their economic situation is.


One of us should start up a thread entitled, 'gay abortionist terror suspect's views on house ownership and debt-management'.
That would get 25+ pages of discussion, I bet.

I think it's just a combination of the majority of NS'ers being either too young to need to worry about where their money comes from, students who are too broke to care or the few older ones who don't wish to be reminded of how perilous their economic situation is.


One of us should start up a thread entitled, 'gay abortionist terror suspect's views on house ownership and debt-management'.
That would get 25+ pages of discussion, I bet.

You made me chuckle. However, I think it is the young folks that really need to learn about finances, credit, wealth-building, etc. because the young have the advantage of time. Plus, it is not like public schools in the US do a phenomenal job at teaching economic skills.