"I actually know people who have no debt."

[blackdogdeek]

Originally posted by: Redhotjrm

Originally posted by: ultimatebob

Originally posted by: Redhotjrm

Originally posted by: Skoorb

Originally posted by: dtyn

Originally posted by: Skoorb

is a mortgage considered part of debt?

It is debt, but I presume that he was talking in regards to consumer debt like a car, but more specifically a credit card. Being 35 without a mortgage (and actually living in a house) is almost unheard of...

I know quite a few families, including my own, who don't have a mortgage, and live in a house.

You don't know many families where the head of the household is 35 living in a house without a mortgage

If you figure a couple who is smart/great with there money and leads a typical lifestyle... both get a bachelors degree at age 22. Make $30k/year each. $60k/year total. Get a 15 year mortgage on a $125k house. That's like a $1100/month. They pay $1800 month instead and get the thing paid off when they are low-to-mid 30s. I've always been told to get a 15 year mortage because the payment is usually only 25% higher than a 30 year mortgage but you save so much money with interest.

Heh, I'd LOVE to know where I can get a $125k house in this area! Most of the decent ones START at $275k

That's just rediculous =( When you say decent, do you mean size / location / quality or what? $275k goes a looooong way here in Northern Kentucky / Greater Cincinnati area. Here is an example:
Off the Northern Kentucky MLS .. custom built for $275k

he's talking about westchester county in ny, i believe, which is very pricy.

our area is montclair/bloomfield, nj which is also pricy.

 

[Red]

Originally posted by: rmrf

Originally posted by: Skoorb

Originally posted by: dtyn

Originally posted by: Skoorb

is a mortgage considered part of debt?

It is debt, but I presume that he was talking in regards to consumer debt like a car, but more specifically a credit card. Being 35 without a mortgage (and actually living in a house) is almost unheard of...

I know quite a few families, including my own, who don't have a mortgage, and live in a house.

You don't know many families where the head of the household is 35 living in a house without a mortgage

Right now with how my wife and I are paying our mortgage, we will have the loan payed off in 12-15 years. We are in the save mode right now and don't spend our money on anything but what we need. I would recommend this method to anyone who can afford it. we pay roughly 25% more on our loan each month and apply it directly to the principal. I wasn't exactly sure of how this was going to pan out until we did our taxes this year. With our mortgage company, when we pay extra it is applied directly to the loan, and moves our payment farther along on the ammortization schedule and skips the interest we would have payed.

edit: btw, I'm 21 years old.

Do you have a degree? Work full time? Kids? What is your house payment if I don't mind asking. The only way I can see my fiancee and I getting married / getting a house at our age (21) is if we were to both quit school (I have 2 semesters left, lol) and both get full time jobs at the massive Citibank complex in our city. They start out at about $23,000k / year full time and that doesn't include their bonus, which is typical $2-3k extra per year. So basically, if a couple really loved each other / weren't too materialistic / didn't mind collecting bills all day, two 18 year olds could make roughly $50k/year combined and do what you're doing in my area on a $125k house. Something like that

 

[Svnla]

I have no debts whatsoever. Never have CC balances. The student loan just being paid off. The 3 years old SUV was paid in cash. I am saving money now for a nice house with a 15 years morgate and I am planning to pay it off in 10 years or even less. I save about 50% of my net take home pay (after taxes) and I live quite nicely (no Ramen noodles and water..LOL).

I dont' understand about folks that live pay check by pay check. At the minimum, you have to save about 5 to 10 percent of your net pay. If you can't do that, then you need to cut back the expenses.

Some of you were talking about debts. There are some good and bad debts. Good debts = anything that you can use to build up equity or knowledge to increase your networth/earning..aka mortage, student loan (of course, within reason and limit). Bad debts = anything that you use for something extraganza, things that you *want* and not really *need* such as credit card, short term loan with excessive interest rate.

 

[StageLeft]

Originally posted by: dtyn

Originally posted by: Viper GTS

Originally posted by: dtyn

Originally posted by: Skoorb

is a mortgage considered part of debt?

It is debt, but I presume that he was talking in regards to consumer debt like a car, but more specifically a credit card. Being 35 without a mortgage (and actually living in a house) is almost unheard of...

I know quite a few families, including my own, who don't have a mortgage, and live in a house.

Renting? Or do they actually own it?

Viper GTS

They own it. They're all between 28-32. Excluding my own family.

Very unusual. I would have no qualms by stating with certainty that 90%+ of 35 year olds in this country living in their own home have a mortgage.

 

[StageLeft]

I think you have to be in debt to build credit..

Nope, if you have a credit card with a zero balance your credit will still build. I build mine from a brand new social security number to a 700+ score in around 8 months when I moved to the US. I started with a $2500 limit credit card and it just sat there every month updating my credit file.

 

[bozack]

Originally posted by: Redhotjrm That's just rediculous =( When you say decent, do you mean size / location / quality or what? $275k goes a looooong way here in Northern Kentucky / Greater Cincinnati area. Here is an example:
Off the Northern Kentucky MLS .. custom built for $275k

Want to really hear ridiculous, we just started looking at houses this weekend, a two bedroom townhouse in a not so nice neighborhood costs anywhere from $350-400K and it is only about 1K sq feet of living space, for anything decent you have to spend 400K plus and that is for a condo and not even near the city....

For a full fledged single family house expect to pay at least $450K and it will be over 50 years old at least, for something relatively new you are looking at $750-800K and not even close to the city....

Here are few links just to give you an example....

Ripoff 1

Ripoff 2

Ripoff 3

I cannot even imagine being debt free in taxachusetts especially when we only make slightly over 100K combined which here is a pittance, damn I should have been a lawyer.

 

[Ketteringo]

People saying that they dont even have credit cards are crazy! How do you expect to build a strong credit score? Also, it is pretty important to have those funds available for emergencies (ie sudden $2,000 hospital bill or car repair). Also, how do you buy all the cool stuff at newegg without a credit card?!

 

[TheGameIs21]

Originally posted by: blackdogdeek

Originally posted by: Skoorb

is a mortgage considered part of debt?

It is debt, but I presume that he was talking in regards to consumer debt like a car, but more specifically a credit card. Being 35 without a mortgage (and actually living in a house) is almost unheard of...

our cars are paid off.

we never carry a cc balance.

we have 29.3 years left on our 30 years mortgage

we must be some of the freaky people that guy is referring to

Same boat. Family of 5.

 

[Riprorin]

I'm 43. I paid my house of about 6 years ago and I have no debt. I max out my 401K and have IRAs for me and my wife.

I have a modest home, drive old cars I buy from auctions, and shop sales.

Our major outlays are the kids' education and travel.

We only have one income too.

 

[guyver01]

If you are only counting credit card debt... i have no debt. i don't carry a balance, and i have over $30k in the bank, with a few dozen thousand in non-liquid assets.

 

[StageLeft]

Originally posted by: bozack

Originally posted by: Redhotjrm That's just rediculous =( When you say decent, do you mean size / location / quality or what? $275k goes a looooong way here in Northern Kentucky / Greater Cincinnati area. Here is an example:
Off the Northern Kentucky MLS .. custom built for $275k

Want to really hear ridiculous, we just started looking at houses this weekend, a two bedroom townhouse in a not so nice neighborhood costs anywhere from $350-400K and it is only about 1K sq feet of living space, for anything decent you have to spend 400K plus and that is for a condo and not even near the city....

For a full fledged single family house expect to pay at least $450K and it will be over 50 years old at least, for something relatively new you are looking at $750-800K and not even close to the city....

Here are few links just to give you an example....

Ripoff 1

Ripoff 2

Ripoff 3

I cannot even imagine being debt free in taxachusetts especially when we only make slightly over 100K combined which here is a pittance, damn I should have been a lawyer.

Damn it. Is that in a great area? I can get a townhouse like that just out of birmingham city limits for $120k.

 

[cmdavid]

its a crazy mentality but it is not too uncommon...
actually know people that have said this to me...
"it doesnt matter how much money you make, you'll always spend a little more than you make".... a lot of people go through the worst financial thought process, and instead of thinking of total cost, all they think about is monthly payments... thats their only goal in life is to lower all of their monthly payments, regardless if it means they are spending more money and paying more interest in the long run or not....
ive been raised by good examples, my parents actually have 0 debt.. no mortgage payments (they bought a 250K house about 4 years ago), no car payments (we've got 2 4Runners (01 & 02), a BMW (old school), a Benz (old school), and a Nissan Pickup Truck (98))... their only bills every month are the ones they incur that month... food, electricity, phones, gas, water, satellite, internet, credit card (paid in full every month.. i dont think they've in their entire life spent one cent on interest incurred from credit card debt)...

 

[allisolm]

Good to see so many people who DON'T live paycheck to paycheck. From what I have seen among my contemporaries and and my children's friends, I was beginning to believe that we were a dying breed. Thanks for restoring my faith.

 

[waggy]

only "debt" we have is a mortgage and car payment.

I pay off my CC every month. I dont buy something if i cant afford it. If it is expensive i save up and buy it.

Debt is bad. i have seen my sister go under from it.

 

[Jeraden]

I'm 30 now and expect to have my mortgage paid off by the time I'm 35 (sooner actually). We keep a constant level of money in the bank (around 20k) which is enough in case of some emergency. Everything extra after paying bills (no other debt aside from car payments) we send to the mortgage. I figure thats a safer investment that risking it on the stock market.

 

[dxkj]

Originally posted by: Skoorb

is a mortgage considered part of debt?

It is debt, but I presume that he was talking in regards to consumer debt like a car, but more specifically a credit card. Being 35 without a mortgage (and actually living in a house) is almost unheard of...

By the time We're ~ 35 (13 years) Im planning on owning a house , 2 cars, and having mortgage + student loans paid off.


Then again, maybe Im dreaming

 

[TheGameIs21]

One of the things I do to control my spending is realize how many hours I will have to work to pay for something. A nice dinner with the wife will cost me about 3 - 5 hours. A DVD burner about 5 hours.

That is another reason I don't have a problem taking a defective item back to the store...

 

[SP33Demon]

Originally posted by: cmdavid
its a crazy mentality but it is not too uncommon...
actually know people that have said this to me...
"it doesnt matter how much money you make, you'll always spend a little more than you make".... a lot of people go through the worst financial thought process, and instead of thinking of total cost, all they think about is monthly payments... thats their only goal in life is to lower all of their monthly payments, regardless if it means they are spending more money and paying more interest in the long run or not....
ive been raised by good examples, my parents actually have 0 debt.. no mortgage payments (they bought a 250K house about 4 years ago), no car payments (we've got 2 4Runners (01 & 02), a BMW (old school), a Benz (old school), and a Nissan Pickup Truck (98))... their only bills every month are the ones they incur that month... food, electricity, phones, gas, water, satellite, internet, credit card (paid in full every month.. i dont think they've in their entire life spent one cent on interest incurred from credit card debt)...

Wow, your parents drive w/out insurance? j/k

Monthly payments are all that really matters when buying a house, if you have previous debt. Then again, having debt is NOT a bad thing, if you're getting a great interest rate. If not, pay it off asap... If I offered to lend you $1,000,000 and you'd only have to pay me back $1/yr for a million years (0%), would you do it? That's a good example of how debt can be good, you just have to know when to incur debt and be smart about how you handle it.

 

[thomsbrain]

Originally posted by: SP33Demon
Yup, I was turned down for a car loan for not having a credit card with at least $1500 limit... I purposefully don't have alot of credit so it doesn't get me into trouble, and then I'm penalized for it? How annoying.

Like someone mentioned earlier, if you're running a business, it's hard to become successful without credit/debt. My college accounting class taught that a 50/50 ratio of cash to debt was healthy.

there's a difference between credit and debt.

 

[UpGrD]

A great many $$ planers say you should die with a mortgage. With the low fixed rates today, keep the mortgage and invest the extra cash. A smart investor will get a better return in the market overtime than having paid off your mortgage early.

But if your motives are piece of mind, having paid off your home is a good thing.

 

[bozack]

Originally posted by: Skoorb

Damn it. Is that in a great area? I can get a townhouse like that just out of birmingham city limits for $120k.

Nope Skoorb, not even that great of an area, in fact about 7 years ago it was where people who could not afford the good areas moved to...here in MA because of the high tech boom housing prices skyrocketed, after the dot bomb prices stayed high because people were hoping for a turnaround...about three years later and people are finally starting to move out in droves, however Biotech is moving in and taking the place of IT, basically too many people and not enough houses, or at least affordable houses...for us to get anything under 200K and decent we would have to incur a 2 hour commute each way every day.

Area's that were once cheap are now 250K+ and up...

We will be happy if we can find a townhouse like those above in a better neighborhood for $300K but we don't see it as a reality.

 

[bozack]

Originally posted by: allisolm
Good to see so many people who DON'T live paycheck to paycheck. From what I have seen among my contemporaries and and my children's friends, I was beginning to believe that we were a dying breed. Thanks for restoring my faith.

for every one I know who doesn't live paycheck to paycheck I know 100 more who do...I even know accountants who love to live beyond their means, honestly if it wasn't for my wife I would also live paycheck to paycheck.

 

[bsobel]

Originally posted by: Jeraden
I'm 30 now and expect to have my mortgage paid off by the time I'm 35 (sooner actually). We keep a constant level of money in the bank (around 20k) which is enough in case of some emergency. Everything extra after paying bills (no other debt aside from car payments) we send to the mortgage. I figure thats a safer investment that risking it on the stock market.

Everyone's risk/reward ratio's are different. That said, I'm always concerned when I see people making such a mad dash to pay of their mortgage's vs diversifying into other assets. The main problem with paying your mortgage off is, what if you need access to a signifigant portion of that money (medical crisis, college, etc). It's very hard to sell 1/2 a house to generate the income, and if you plan on pulling a mortgage later you don't know what your income may be to pay it off (especially if it's you that is in the hospital).

Since you are not comfortable with the stock market, have you and your wife considered taking that extra money and putting it aside for a down payment on a second (smaller) starter home and using that as a rental? In most parts of the country if you can hit north of 15% down your most likely to be cash flow positive (even with management fees if you choose) (CA is a bit worse, you'll need more down). But you'll wind up with the appreciation benefits on both homes, plus have the ability to sell one when needed.

Debt provides an incredible amount of leverage to increase your net worth when used properly. And it's pretty simply, debt against items which will increase in value = good, debt for items which will decrease or be consumed = bad

Bill

 

[RossMAN]

I used to hate having NO CREDIT.

Now I hate having too much of OUTSTANDING CREDIT.

Anytime I apply for a new cc I get approved for $5k-$10k

 

[Mookow]

Originally posted by: RossMAN
I used to hate having NO CREDIT.

Now I hate having too much of OUTSTANDING CREDIT.

Anytime I apply for a new cc I get approved for $5k-$10k

Just float one of those my way. I'll only use it for emergencies and stuff...