Never borrow on credit cards what you can't afford to pay off at the end of the month. Credit card companies are unethical usurers and I suspect them of anticompetitive practises to keep their borrowing rates extortionate.
Are You In Debt?
- Thread starter All Seeing Eye
- Start date
That's really silly. Saving up hoards of money and sticking it in a bank or under a mattress isn't a particularly good use of money. A savings account will merely keep up with inflation, while keeping it in either a checking account or a mattress will actually cost you purchasing power as inflation chips away. Credit A) allows you to get what you want/need now, by promising a piece of your future earnings (which will be worth less due to the same inflation eating into your bank account) and B) frees up past income for investing, hopefully in something that has a higher rate of interest than what you're being charged.
Even Apple Inc, which seems to be able to print money, still takes out loans. Warren Buffet owes somebody, somewhere money for something. Credit, more than any single invention (possibly excepting the steam engine) has built the modern age, which has generated insane standards of living in this country despite recent cutbacks.
This is a good point. In fact, since US currency is inflationary over the long term, any debts you owe are worth less as time passes in terms of real dollars. It's the same principle that causes countries to devalue (inflate) their currency: it reduces the real value of their outstanding debts.
A long-term debt strategy that accounts for inflation can actually be a better deal than simply saving up the hard cash.
Are we debt free? Yes, excluding the mortgage
If you include the mortgage, that will probably be paid off in the next 60 days
*
How did we get this way? By busting our asses. Years ago the wife and I made some very stupid mistakes. But we stopped and changed our behavior and worked and worked and worked to pay down the debt. At times that meant picking up extra hours or a second job. Was it painful? You bet your ass. Regardless we did it.
We went against the conventional wisdom of concentrating on paying off the debts with the higher interest rates. Instead we based our payoff schedule on the size of the debt. We paid off the smaller amounts first. As each of those were paid off we were able to shift that money we had been spending on the smaller debts to the larger debts. The end result is that we wound up still beating the interest monster and we had a much more visible set of metrics that we could see and feel accomplishment with. That feeling helped to keep us dedicated to our goal.
* Our house is about to be declared a total loss by our insurance company (sinkhole). Yeah its hitting the redneck lottery but its our home. We may continue to live in the place until it falls into the face of the earth or we may sell the property at 1/4 of its appraised value sans sinkhole. If we live here then we sock the money we would have been paying on the mortgage into investments. After 5 years of investing we should be doing even better. But we still lose our house and our great neighborhood.
If you include the mortgage, that will probably be paid off in the next 60 days
*How did we get this way? By busting our asses. Years ago the wife and I made some very stupid mistakes. But we stopped and changed our behavior and worked and worked and worked to pay down the debt. At times that meant picking up extra hours or a second job. Was it painful? You bet your ass. Regardless we did it.
We went against the conventional wisdom of concentrating on paying off the debts with the higher interest rates. Instead we based our payoff schedule on the size of the debt. We paid off the smaller amounts first. As each of those were paid off we were able to shift that money we had been spending on the smaller debts to the larger debts. The end result is that we wound up still beating the interest monster and we had a much more visible set of metrics that we could see and feel accomplishment with. That feeling helped to keep us dedicated to our goal.
* Our house is about to be declared a total loss by our insurance company (sinkhole). Yeah its hitting the redneck lottery but its our home. We may continue to live in the place until it falls into the face of the earth or we may sell the property at 1/4 of its appraised value sans sinkhole. If we live here then we sock the money we would have been paying on the mortgage into investments. After 5 years of investing we should be doing even better. But we still lose our house and our great neighborhood.
I really don't see it that way.
No-one comes chasing after you for payments, it has little to no bearing on your Credit Rating, you only start paying it back when you're earning above a certain threshold (which is deducted from your salary at the source so you don't even miss it) and anything you fail to pay back by the time you hit retirement gets written off anyway.
Like tax deductions (for the interest) for one thing. It's why I wouldn't completely pay off my mortgage now, even if I had enough money to do so..
I don't think that's the case everywhere.
They can't change an existing loan, it's sold on the terms at the time of sale, not some new ones they made up later. Just as I wasn't affected by 'Top Up fees' as an existing loan holder. There are some major changes likely ahead for new students but if they think they can shoehorn those of us already in the 'system' into the changes, what's the phrase? They'll be hearing from my lawyer
Besides, the amount I pay now is frankly an embarrassment. I spend more on orange juice. So I wouldn't be too cut up if it went up a bit. I won't pay it off before its written off anyway so the interest level is irrelevant. For all practical purposes, it's a 15 year graduate tax not a loan repayment.
The 'change' was already in the existing agreement, they are simply moving the rate of interest to more of a commercial rate. If you took out a loan between 1990-1997, the interest rate is shifting from -0.4% to 4.4%, if you took out a loan after this, then it's Base rate + 1%.
It's not the case in the US. You can get your loan repayments deferred for something like 6 months after you graduate. After that, you can have up to (I think) 36 months of forbearance, which you can take whenever you like in however many monthly increments you want. But interest accumulates during that period.
My student loan payments are deducted from my bank account once a month. I don't think they're ever taken directly from your paycheck unless maybe you're being garnished.
That's one of those 'common wisdom' things that's actually retarded in reality, kinda like how people don't understand income tax, so actively try to stay under a certain threshold so they don't hit a higher tax bracket.
Yeah, the interest deduction is nice, but do the math out. You get SOME of the interest back, but are paying more than that. If you just stopped the payments altogether, you'd have more money to play with, and come out ahead. Your argument really works out to "I like paying $100, because I get $20 back!". You're losing money doing that, if you can afford to pay it off. The deduction isn't more than the interest...
My mortgage has a pretty good rate (6.5%, fixed). And I do like the deductions, because without them I might owe tax, and I wouldn't want that.
How does that matter, though? Just a matter of when you see the money. You're bragging about how paying the bank $10 gets you a $3 deduction on your taxes. Just losing $7 for no reason 
Sure, means you might now owe the IRS $2, instead of getting $3 back, but you still end up with more money in that situation. If you still want to give the government an interest-free loan of your money, adjust your withholding so that they take more every paycheck, and you'll get a nice return.
But that's even dumber, as you're just giving them money to hold on to, and hoping they return it. Better to be close to even, or even OWE a little bit at tax time. Means you've had YOUR money in YOUR account all year, invested, or in savings earning interest (free money) every month. Tax Refund day just feels like Retard Savings Accounts to me, where people that can't manage their money brag about how much they got back, and then proceed to blow it on crap, because it's "free money". If they just withheld less, they'd have gotten an extra $100 a paycheck (or whatever) ALL YEAR that they could have done whatever with. But then they'd have blown it, and couldn't afford to splurge in April...
Sure, means you might now owe the IRS $2, instead of getting $3 back, but you still end up with more money in that situation. If you still want to give the government an interest-free loan of your money, adjust your withholding so that they take more every paycheck, and you'll get a nice return.
But that's even dumber, as you're just giving them money to hold on to, and hoping they return it. Better to be close to even, or even OWE a little bit at tax time. Means you've had YOUR money in YOUR account all year, invested, or in savings earning interest (free money) every month. Tax Refund day just feels like Retard Savings Accounts to me, where people that can't manage their money brag about how much they got back, and then proceed to blow it on crap, because it's "free money". If they just withheld less, they'd have gotten an extra $100 a paycheck (or whatever) ALL YEAR that they could have done whatever with. But then they'd have blown it, and couldn't afford to splurge in April...
I don't care about that "interest-free loan" crap. I do get the money back. Better to have that happen than to owe tax. And my checking account doesn't earn interest anyway, so what the hell do I care? And I don't blow my refunds on any frivolous things. 
Near as I can tell, that post contained zero actual logic. Why are you afraid to owe taxes at the end of the year? It's not like it's some extra tax that you get hit with, you owe the same amount no matter WHEN you pay it.
You're chosing to pay a $10 tax with a $20, and then get 10 back later, whereas I'm arguing that it's smarter to just pay $8 upfront, and then owe $2 at the end of the year. Invest the other $10, or spend it on whatever, and you're coming out ahead of the game. Don't keep all your money in a checking account, set up a savings account, that pays interest. THAT'S why you should care. Interest=free money=good. Seem to remember having this talk with you before, so yes, you have to pay tax on the interest, as it's income, after all, but you still come out ahead, and it's just another box on the tax form. If you make $20 in interest, and you get to keep $15 of that, it's still free money...
WHY is over-paying better? You make that claim, but don't back it up. Getting your over-payment back, without interest, doesn't appear to be a benefit. Why not just get an extra amount in every paycheck, and then be even at tax season (or get a small return or owe a small payment)?
You're chosing to pay a $10 tax with a $20, and then get 10 back later, whereas I'm arguing that it's smarter to just pay $8 upfront, and then owe $2 at the end of the year. Invest the other $10, or spend it on whatever, and you're coming out ahead of the game. Don't keep all your money in a checking account, set up a savings account, that pays interest. THAT'S why you should care. Interest=free money=good. Seem to remember having this talk with you before, so yes, you have to pay tax on the interest, as it's income, after all, but you still come out ahead, and it's just another box on the tax form. If you make $20 in interest, and you get to keep $15 of that, it's still free money...
WHY is over-paying better? You make that claim, but don't back it up. Getting your over-payment back, without interest, doesn't appear to be a benefit. Why not just get an extra amount in every paycheck, and then be even at tax season (or get a small return or owe a small payment)?
There's no reason to deliberately arrange a tax refund for yourself unless you're just really bad with money.
I adjust my withholding every year to try to get it as close to balance as possible. I'd rather have the dough in my paycheck than get a fat refund on my interest-free loan to Uncle Sam.
I adjust my withholding every year to try to get it as close to balance as possible. I'd rather have the dough in my paycheck than get a fat refund on my interest-free loan to Uncle Sam.
Just my home mortgage.
doubleohfive
Fleet Admiral
I haven't been in debt for almost 20 years. On the other hand, I have no credit.
On the other other hand, I suspect you don't need credit.
Even if you do, there's still manual underwriting.
I don't care about that "interest-free loan" crap. I do get the money back. Better to have that happen than to owe tax. And my checking account doesn't earn interest anyway, so what the hell do I care? And I don't blow my refunds on any frivolous things.
In that case, I'll send you my address. I'll happily borrow any amount of money from you for up to one year and give that exact amount back to you sometime between January 1st and April 15th, provided you file the proper paperwork with me on time. I promise you that my penalties and fees for things like late-filing or mis-filing will be easier on you than Uncle Sam's, so it's a better deal for you. After all, your checking account doesn't earn interest anyway so what the hell do you care?
