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  1. #61
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    Dec. 4, 2005
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    washington state
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    6,751

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    No but I will like your post.
    The Knotted Pony

    Proud and upstanding member of the Snort and Blow Clique.



  2. #62
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    Nov. 15, 2006
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    Lexington, Kentucky
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    3,281

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    Quote Originally Posted by Trixie View Post

    And I really don't get the thought that managing that is entirely luck. Partially luck, fine, but not entirely luck.

    I don't disagree with the notion that it was easier for previous generations. The inflation percentages on things like homes and educations have skyrocketed well past the average increase in wages. That makes it much harder.
    I don't see where anyone said it was entirely luck, just that luck was a factor, which indeed it is.

    This is a good thread though, inspiring. As someone who had some bad luck, and consequently had to pretty much start over, it's very good to read. I've gotten careless in the last few years and need to be more disciplined again.
    We're spending our money on horses and bourbon. The rest we're just wasting.
    www.dleestudio.com


    1 members found this post helpful.

  3. #63
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    Jul. 31, 2007
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    Quote Originally Posted by Coanteen View Post
    I should note that this was in response to a poster who knows people debt-free in their 20's.

    So is that the standard now? Own a home, a nice car? Otherwise you're just fake-debt-free?
    To put out further potential fights, let me give you guys some standards or definitions of 'debt free' and 'good debt/bad debt' that I have seen people use.

    "Debt free" #1 = No unsecured notes. So you can have collateralized debts, the house or the car that the bank can take back if you don't pay. Unsecured debt means things like credit cards, personal lines of credit, the $100 your brother slipped you just because you said you'd pay him back next week. Now had you given him your i-phone as collateral on that Benjamin, you would have used a better form of debting.

    Debt free #2 = No obligations of any kind. You own your house or car or most recent hair cut free and clear. You pay all bills by their due date. If your creditors accept payment schedules, you follow those. This is about being current on all your bills.

    Good- vs bad debt.

    My version = "the math problem"-- It means that you are paying the least possible interest rate for the loan you have, AND the thing bought with the loan was worth the interest paid. So.... was my used but Museum Quality truck worth the 4.75% rate I paid? It was. I needed her to pull the horse and my tuckus around. She became less worth that amount when interest rates dropped. My job was to renegotiate. I paid her off. But she is still worth what I paid because I needed her particular features bad.

    Obviously consumer debt in the form of credit cards is bad. So... you like your $5 latte. Do you like that plus 19% on top of the $5?

    And... student loans as well as mortgages. Good or bad? Depends on the ROI. With student loans especially, I think they are becoming a coerced kind of debt. They may not financially pay off as interest rates stay near 10% while the US gubment is talking about rates near 0%, and folks are borrowing for mere bachelor's degrees. But consider the alternative: Building a career from a high school diploma.

    The housing question. Yeah, you need somewhere to live. Yeah, you get a tax break on your mortgage's interest. But what's the ROI on the abode you chose? Do your kids get fabulous education for that "too much house" in a fancy neighborhood? Do you have visions of selling it for twice what you paid? In short, as with everything else, What is your motivation for being in that particular house (or apartment or yurt) and what was that worth to you in quantitative terms?
    The armchair saddler
    Politically Pro-Cat



  4. #64
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    Jul. 31, 2007
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    14,929

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    Quote Originally Posted by FineAlready View Post
    Pssst...for those pushing renting instead of buying and mortgaging a home: please note that rent payments are gone forever. Payments on a home mortgage build your credit, at least theoretically build equity (so long as real estate prices hold steady or do not decline drastically and stay down), and result in tax benefits.

    The most "wasted" money I think I ever spent was the $2,000/month for a little apartment in Chicago that was next to a YMCA (the kind people actually lived in), had terrifying elevators, ancient appliances, and kind of a gross smell. And it was right on an El line, which was both convenient and loud. I spend far less than $2,000/mo. on my mortgage (cheaper city), plus I'm building equity instead of throwing money away on rent each month.
    Meh, let me complicate this picture a bit.

    Rent is "gone" on a per month basis... but equity disappears too if you screw up and use your house as an ATM...you find yourself forced to do that or sell (say, you lose your job, get huge medical bills, need to move for another job)... or your equity disappears merely if other people popped a real estate bubble around you.

    You write off your mortgage interest. But what that means is that you don't pay your tax bracket's percentage on the mortgage's interest. Is that a big deal? To some in high tax brackets and near the beginning of their loan, yes it looks like a good chunk of change. But you aren't getting anything substantial for free.

    I'm with you, FineAlready: I once paid too much for a place with location. Never again. I found it wasn't worth it to me. Along the same lines, I'd never buy a house separated from my work by a horrendous commute just to own it.

    My advice from all this:

    1. Know that housing is the biggest, relatively stable, non-negotiable bill you have each month, all the time.

    2. Decide if you want your largest bill to be for luxury, or whether you'd like to spread your indulgences around a bit-- say among your horse, lattes, a sweet ride or whatever.

    3. Ask yourself what your housing does for you and does to you. I strongly suggest that you don't use your house as a status symbol. Pick a cheaper, less damaging luxury to use for that. Ask what else you suffer in your life in order to live in a great place. Or, conversely, does you cheap-a$$ place in a bad neighborhood or with heinous landlords/neighbors cause you daily grief?

    Pick your housing any way you want, but know that it's the biggest source of wasting or saving that most people do and that's relatively within their control.
    The armchair saddler
    Politically Pro-Cat


    2 members found this post helpful.

  5. #65
    Join Date
    Jun. 20, 2009
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    Hunterdon County NJ
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    While I am happy for those who have spouses who have been equally devoted to debt free, responsible lifestyles, I know plenty of contrary scenarios. Situations where a hard working spouse was screwed over by a dishonest, dead beat, spend thrift partner.

    None of these were because the people were stupid, lazy, or self indulgent. All these people had degrees, experience, etc and somehow the situation still got out of their control. People they trusted lied to them. Fell through on obligations. Or they became ill.

    One was someone with epilepsy. I didn't know it at the time(used to work for them), but apparently both the seizures and the medication to prevent them can slowly destroy your brain. That person's judgement and mental skills slowly deteriorated over time. They were not lazy. But they did suffer from a slow mental degeneration that they did not understand.

    When I hear someone tell me that their spouse cheated on them, took the house, and they live debt free despite continuous health problems, I will be impressed. But most of these hard working folks who are debt free are also LUCKY enough to not have been handed chronic life problems. Unhealthy children, spouses, homes lost to floods (wanna take a guess at how many people are NOT covered by their insurance after Sandy because they lived someplace they thought was not in a 'flood zone?' I know one elderly couple that is in that situation.)

    Personally I am debt free. Yes. But that means I will get chastised by some here for not having a smart phone and uploading videos fast enough...... There are constant threads about "well it doesn't cost THAT much for this or that toy/convenience, so you should have it."


    1 members found this post helpful.

  6. #66
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    Jul. 31, 2007
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    Quote Originally Posted by DLee View Post
    I don't see where anyone said it was entirely luck, just that luck was a factor, which indeed it is.

    This is a good thread though, inspiring. As someone who had some bad luck, and consequently had to pretty much start over, it's very good to read. I've gotten careless in the last few years and need to be more disciplined again.
    The discussion of luck-- really "Who or what has the greatest effect on the outcome?" question is a big deal.

    Part of what makes me *like* the project of getting debt free is that I feel some control over that.

    I have felt, too, what some other posters have pointed out: Once you see that you can pay down debt, you notice the rest more. That poster mentioned paying off the Granddaddy of 'em all, her mortgage, and then noticing the smaller ones. I'm doing it the other way around, perhaps with less joy: Credit cards were excommunicated first (the rat ba$tards), then vehicle loans and now the mammoth student loans loom as the next mountain.

    But I do keep my power to make a difference in mind.
    The armchair saddler
    Politically Pro-Cat



  7. #67
    Join Date
    Dec. 2, 2009
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    3,009

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    We live debt free. Completely debt free, as my experiences with trying to sell a house in a down market soured me to banks and the whole experience of credit. Yes, I've experienced the same issue as Lord Helpus and I probably should get a card but it ticks me off to have to play the game by their rules. Really ticks me off.

    How does it feel? It feels...marvelous. Sure, I don't have the latest things. We drive old cars. We rent a home (from a family member to keep all the money in the family). We may not have the nicest things, but we don't have to look over our shoulders, either. We were able to go down to one income so that I could start a business, and then my husband was able to take another 1/3 paycut so that he could get out of a job that sucked. We wouldn't have been able to do that if we had fire-breathers down our backs.

    Is it a struggle sometimes? Sure. It's usually one of cashflow since most of our savings is in investments that aren't currently available to us. We're working on building up a buffer again so that the cashflow isn't an issue (but that's hard with kids and animals). But when you look at what we actually have - we're lucky.

    And yes - I do think luck has *something* to do with it for some people. OTOH, I know of people who could not imagine living as we do. For instance, right now we don't have a couch (the dogs destroyed the last one, and I don't have enough money in the "couch" budget to get a new one). So we make do with chairs around the living room. It's definitely not killing us, but it's considered ghastly in our suburban area.

    Fun!



  8. #68
    Join Date
    Sep. 13, 2006
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    At the back of the line
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    4,016

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    Quote Originally Posted by OneGrayPony View Post
    For instance, right now we don't have a couch (the dogs destroyed the last one, and I don't have enough money in the "couch" budget to get a new one). So we make do with chairs around the living room.
    Fun!
    When I was a teen I babysat for the DD of the local GP in our town, she was a nurse, I forget what her DH was. They had 2 kids, bought a decent newer house near her parents/other family. They had LAWNCHAIRS in the livging room, I laughted at the time but now I see they were not handed $$$ from her dad who was well off. They worked and I guess saved for their furniture, the way it should be done.

    Live beneath your means & you will be debt free, we are not there yet but owe some on the house, thats all.
    “Management is doing things right; leadership is doing the right things.” Peter Drucker


    1 members found this post helpful.

  9. #69
    Join Date
    Sep. 5, 2005
    Location
    Mass.
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    6,605

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    I'd be interested for everyone who has posted on this thread, whether or not you have children that will be going/are going/have graduated from college. We have two kids, and when they were little made the choice to spend our money on their education. We drove the same car from second grade through high school. We went on one vacation a year, to my parents' house at the beach. We have a mortgage and no credit card debt. Two years ago we bought our first new car in ten years. When our son graduates from college next year, he will have less than $15,000 in student loans. So - are we debt free? Not quite, but we're not putting our son in hock for $100,000 in college loans, either.
    I realize that I'm generalizing here, but as is often the case when I generalize, I don't care. ~ Dave Barry


    1 members found this post helpful.

  10. #70
    Join Date
    Jan. 31, 2003
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    18,472

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    We are debt free other than our mortgage, which is at an excellent rate and is of a significantly lower amount than the value of our farm, even in this market. Buying well is important in any market, and whoever said basing what you can afford for your home by going wayyy under your budget is very wise. I can remember being very shocked by the amounts of mortgages we were offered, it was insane. With two kids buying in an excellent school district was a priority but because we are in the country not the city, not a huge impact on house price. Our taxes are higher than the county a mile away - but not as high as private school, even if I lived here until I died.

    We have had other debt when we needed to have it. Bought the tractor on a 1.9% loan, paid it off, I think there was less than $100 in interest. We have had car loans - paid off cars that we will drive until they die or get given to the kids. Hondas and Toyotas last forever. My farm truck and trailer were paid for in cash and neither is impressive looking. I dont care, they are safe and well maintained and do the job.

    We have nice horses but thats my business so of course we do. I dont show any more but if LMEqT is bitten by the bug we will make a budget for it.

    We live nicely but always within our means. We do travel, we do eat well, but we dont spend money as an entertainment or eat out a lot. Most money goes back into the farm, latest big expenditure was landscaping and a berry patch.

    There is money saved for the kids to go to college but they both know that they are expected to get good enough grades to get scholarships also. We are very involved in their schoolwork as our expectations are high.

    For the most part if we cant pay for it in cash we just dont even consider it. How does it feel? Good. There is enough money in the bank to handle any (un)foreseeable disasters. FWIW neither of us inherited anything at all but did graduate without student debt, which I believe helps a lot. LMEqT claims she wants this farm when we die so that is something we would like to do for her if we can, she is only nine so who knows? My son wants CASH LOL.
    "Kindness is free" ~ Eurofoal
    ---
    The CoTH CYA - please consult w/your veterinarian under any and all circumstances.



  11. #71
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    Feb. 27, 2004
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    984

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    We had nothing when we started and had 3 children in 3 years. DH managed a dairy. We bought a mobile home, then land, didn't move mobile home to land, DH built a house (small) by himself in his "spare" time. When the kids got in school I got a part time job but they were still my main priority. When we wanted a larger house and the area we were in was now full of mobile homes so we wouldn't get the money back from enlarging our home we sold it. Owner financed it. Bought a nice house on land with a barn. That was the only time we had a mortgage. My parents came into some money and gifted us with a bit which we applied to the principal. Got out of dairy business after we'd both gone back to school and ended up moving to my parents farm after they passed. DH once again built us a house, substantial larger than the first house, also while working full time as a RN. We put our girls through college. Bought them cars (his idea more than mine).

    I grew up with parents who only ever financed their home. So using credit was a new way to me. DH is good at using credit to our benefit . We have couple of loans (tractor, car), which we could pay off if needed too. Land and house are paid for. Bills are paid in full each month. We have worked very hard to be in this place. Yes, my parents helped us a bit, we've done the same for our married children. We both feel like a helping hand when you need it is more beneficial than money inherited after death.

    My daughters are doing much the same thing. I don't always agree with their choices but I realize that their spouses have something to do with it. (I'm sure my parents weren't thrilled with all our choices either). They have much more stuff and do more than we did. They aren't so happy to give up stuff to have more money. (this is mainly the spouses).

    It feels good to not have to worry about money and paying bills. Maybe we were lucky that we both knew how to sacrifice to have the things we wanted.


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  12. #72
    Join Date
    Dec. 18, 2006
    Location
    NY
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    4,332

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    Quote Originally Posted by Guin View Post
    I'd be interested for everyone who has posted on this thread, whether or not you have children that will be going/are going/have graduated from college. We have two kids, and when they were little made the choice to spend our money on their education. We drove the same car from second grade through high school. We went on one vacation a year, to my parents' house at the beach. We have a mortgage and no credit card debt. Two years ago we bought our first new car in ten years. When our son graduates from college next year, he will have less than $15,000 in student loans. So - are we debt free? Not quite, but we're not putting our son in hock for $100,000 in college loans, either.
    This is an important factor in many of the "luck" scenarios. I know of many young graduates who are crippled by student loans immediately upon graduation, and who may never get a foothold on their finances...always living beyond their means because they were saddled with a huge debt (and the belief that it was a worthwhile debt to take on - that it could be easily repaid.)

    To have the parents take out huge loans is equally bad, because your kids may just as easily inherit that debt in 25 years. I am in my mid-40s and have several friends who are afraid to find out what their now older parents financial situations are - parents who bankrolled their kids' education. The kids are finally making some money and out of their own debt accrued along the way from buying homes, having kids, starting careers...and may need to manage their parents final 10-15 years out of their own money.

    My kids are nearing college age but we are quite sure that the first 2 years will be done in community colleges and then appropriate career decisions made after that - whether to transfer to 4 year colleges, work for a while, whatever. Too many kids dive into a 4+ year education without a clue of what to do with it when they are done. We are all going to be doing a lot of research for a while....most importantly to determine the cost/benefit relationship of the college education v. the career you would get using that degree.
    Last edited by S1969; Nov. 24, 2012 at 08:16 AM. Reason: grammar


    4 members found this post helpful.

  13. #73
    Join Date
    Apr. 29, 2006
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    3,300

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    For me, my parents and their friends and the children of their friends live with VASTLY different means that I do. This creates huge issues when my Mother comes to visit and does not understand why I don't have a bigger house, newer car or fly her to Italy first class like the daughter of her friend does. She doesn't understand why I drive a 15 year old car when X drives a BMW. My Mother has never paid a bill in her life (besides her Visa bill for 'stuff' she buys) and simply has never, ever had to live within any means. I'm not visiting for Christmas because the pressure to buy, buy, buy is just more than I can take.


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  14. #74
    Join Date
    May. 4, 2003
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    Canada
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    As we get nearer that dreaded "fixed income" stage of our lives we have worked really hard to save and pay our bills. I sleep better because I'm not worried about how to pay bills, but I don't sleep well because I need to kow our money is safe but earning a bit, too, and ni these times that is hard.

    We paid our mortgage in '88 because I broke my heart and sold a horse!

    We don't live large, love our family around us, and don't spend on 'lifestyle'.
    But the day will come when we need a newer car, or the roof needs replacing and so I need to keep up my rainy day fund which I never dip into unless it is an emergency.
    Proud member of People Who Hate to Kill Wildlife clique



  15. #75
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    Feb. 4, 2006
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    Quote Originally Posted by Frank B View Post
    Another excellent source of information is Dave Ramsey: http://www.daveramsey.com/home/

    Many say he is too extreme, but remember that he is the "Alcoholics Anonymous" of debtors. Persons more fiscally responsible and disciplined than his target audience can still benefit from much of his advice.
    Dave is awesome. I have to ignore the more religious bent to some of his teachings, but it's otherwise great. I had no one really to teach me how to save, budget, etc, and it changed my life. Budgeting before the month begins is absolutely key, and the way he teaches it is very simple and easy to do.



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