Thinking of taking on some debt, especially major debt?

joyfulguy

13 years ago

I wrote a thread over on "Household Finance" a few days ago about that topic.

Mainly related to how well would you manage were interest rates to double ... or triple.

I quoted a message that I got from my bank in 1980, notifying me that they were going to charge me 16%.

Many of us are saying that inflation in our part of the world is coming: it's only a matter of time.

ole joyful

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Comments (15)

Cherryfizz
13 years ago
Nope I'm not taking on any debt in the foreseeable future and the only debt I have is the mortgage on the rental house which doesn't need to be renewed for another year.
patti43
13 years ago
Not me. We have a 30-year fixed mortgage at 5.375% but that's it. I sure wouldn't take on a debt at 16%. Yikes--too old for that! It's bad enough that groceries and gas seem to have tripled overnight.
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Hi Billl, Though I drive a car that's more than 1/4 my (rather advanced) age ... I'm not broke. My money's hard at work, elsewhere. And I prefer not to cash in some of those instruments to cover an emergency, when I consider the cost of sale, paying tax on capital gain, then the frictional cost (commission) of re-buyiing in a number of months after I'd done some more saving. I call that making the credit card work for me, rather than letting myself become its servant. The part that I don't like about using the line of credit to pay off the credit card balance owing is that the interest isn't deductible. Actually, in recent months I've had more than enough cash on hand to cover almost any potential emergency, but have been worried about making further investments, figuring that the markets are too high and probably about to slide some. I had to pay over $800.00 to fix another guy's car after an accident a few months ago, and over $600. to fix mine (blew a brake line when I braked harder than usual) and paid it all out of ready cash on hand (with more to spare). But - part of the advice that I give (and try to follow - more or less) is to make regular investments ... that way, when prices are low, you get more shares for the same amount, and later, when prices are high, you get fewer ... ... so your average price is better. Trying to time the market - which is unwise, most of the time. It's rather easy to say, "Do as I say ... not as I do", right? ole joyfuelled
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Good for you Sunflower! I've been thinking about your situation over the past few days, and had an epiphany a few minutes ago, and wondered if that might apply. You seem like a sensible and reasonably mature (though young - under 30) person who's goal-oriented. All good. And you talked about moving forward with your relationship -- and I get that. Moving forward in a relationship is generally what we like to do. It's the normal and logical progression of life: High school, some high school boyfriends, college, some college boyfriends, graduate, get a job, set up life with an apartment, career, more boyfriends. Then you find a BF you especially like who especially likes you, and you move forward -- maybe live together, then get married. Then you have kids, raise a happy family, etc., etc. You spoke of moving in together as 'moving forward', and I'm wondering if in your mind, is somehow is. Like it's 'advancing to the next stage of life' -- moving your game piece forward, or 'growing up' another degree. And in a sense, it is. It is moving to another stage of life. But viewing it from that angle makes it sound like it's automatically a good thing -- a step ahead, a move forward. And in reality, it isn't at all! (Does the teen mother who marries her high school baby daddy somehow 'win' by going through her step-forwards quickly?) It certainly can be a move forward -- with the right guy at the right time in the right circumstances. But it can be every bit as much the learning and growing experience to say "No" as it is to say OK and move in together. Laying out your ground rules -- the way you did by specifying that he had to get his finances in order -- That's a very empowering thing you did! If it turns out we were all wrong and he is a reponsible guy, then he'll respect you for taking a stance now. And if he's a weak link, that'll become evident too, and probably a bit sooner now. You're doing the right thing Sunflower! And that's really a step forward.
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User
13 years ago
I only have maybe five or six years left to pay off my house. I'm 3 months away from being credit card debt free. I plan on staying that way.
hounds_x_two
13 years ago
Not here! I'm thinking about retiring. I have money saved to pay for a new(or new to me)car when my 2000 Honda Accord refuses to move. It has 228,000 miles on it, and I do not have new car fever, so hopefully it will make it for a few thousand more miles.
jannie
13 years ago
I'm in the process of paying off all my credit cards. Don't ask. I'll be out from under that weight in about 3 years. Not thinking of taking on any new debt. My mom passed away lat month, when we get the inheiritance we'll give some to our kids (one DD needs a new car) and do some projects to fix up our home, plus DH needs a lot of dental work. But we will not borrow again.
nicole__
13 years ago
I agree....hyper inflation is coming.....good call ol joyful!
bigfoot_liz
13 years ago
i have been credit card free since 2006, living only on cash. i have a small mortgage on my house and am still up 200% (had been 300+%) on it even here in orlando, bought early, put down a good payment, pay towards principle ea month etc... do have a car loan but learned from a mistake several yrs ago when i paid all cash for a 1yr grand cherokee. I should have gotten a loan w/ very low interest rate, put the cash in the bank earning interest off-setting the loan interest and set up auto pay and that is what i do now, i am making 2.5% over my loan interest and can still access that cash for an extreme huge emergency.

the only justifiable kind of debt, other than a mortgage of 75% of current market value or less @ 5% or less, is education for a better job. most student loans should be coming in under 6% too, DH's is 2%. you also can not just study what you "like" that is what has sunk the younger generation you must study what is employable in the future. someone may like art history or literature but it is a waste of your $$ to study something you can not make atleast double a yr what your loans are.

with the direction the world is going if you don't make enough $$ or have enough $$ right now you will need to make some major shift in your circumstances or your future only holds less $$. our spot in the world as controller of pricing is slipping down everyday, china and india are the controllers of the future and as demand goes up as they rise, our prices go up. those countries have been paying the price all these yrs for being the under dogs, we have always been the ones to drive up prices but now with the shift they will be. daniel pink wrote a good book several yrs ago on this trend and it is finally coming to fruition. i feel very blessed and lucky to have been raised to be a completely independent, self-supporting individual who has planned since age 19 to retire w/ enough cash on hand (not including stocks, gold or any assets) to earn a 6 figure income each yr in interest while in retirement, so far i'm on track... when my DH has his MS in Mechanical Engineering at the end of the yr i will be going back for my masters so i can make even more $$... ~ liz
schoolhouse_gw
13 years ago
I had my old house paid off since 1994, then two years ago this April I had to have the foundation repaired asap. Took out a Home Equity at 5%. So far, I've got it half paid back with two, two and half more years to go. I was so nervous when I signed that loan paper, it had been so long since I put myself in debt that much.
User
13 years ago
been out of debt 8 years. we went through dave ramsey course 12 years ago and felt compelled from the Lord to get out of debt and stay out of debt. no house payment, no car payment, no credit card payment (except monthly that is pd. in full, that we receive bonuses on) no loans and more investments, retirement savings than we have ever had. living life like it was intented to be lived. "Neither a borrower nor a lender be" Shakespeare
cynic
13 years ago
House has been paid off for, geez, probably 15 years or more now. I don't take out loans on cars. I paid for my schooling *myself* and didn't take out loans or grants, nor did my parents pay for me. I pay off credit cards every month. And I have a savings account. Not planning to take on debt. Why should I? If I can't pay for it, I don't buy it. I don't have that kind of ego that I'm compelled to keep up with the Jones'

Having had simple tastes and a modest lifestyle pretty much all my life has enabled me to not get caught up in this stuff that so many seem to want, like bankruptcy, foreclosure, etc. I've been through unemployment for a long time, injuries and the like but I can still keep up.
joyfulguy
Original Author
13 years ago
Hi cynic,

Yeah - unemployment, injuries, etc. do teach one some drastic lessons, don't they?

At such times, it sure helps if one has savings on hand that one can live on for half a year or so:(partial) financial freedom!

ole joyful
cynic
13 years ago
You know Joyful, it's really not that difficult to have a cushion like that for most people who want it. As you well know Joyful, one can live quite "cheap" if one wants to live cheap. And not have to deprive oneself that much either. It's the ones who have a compulsion to spend for the sake of spending that get into trouble, and cause trouble for the rest of us quite often.
country_sunshine
13 years ago
No credit card debt that cannot be paid each month in full... Small mortgage that I intend to escalate to get it paid off within 2 years. The car we purchased 2 years ago has just over 27,000 miles on it and so I will keep it for quite awhile unless something unforseen happens..

Then it is just utilities, insurances, and normal maintenance and groceries...... and I grow a lot of my own food...

I bake all my own breads, rolls, and cook 90% of my food from scratch... very little prepared foods unless I can get one heckuva deal on it... like nearly free.. lol

I barter for lots of stuff too...

Carolyn
joyfulguy
Original Author
13 years ago
Hi sunshine,

It was mild yesterday and there was sunshine.

Today is dull and a bit hazy - and you brought a ray of sunshine into my life. Thanks for that.

ole joyful
country_sunshine
13 years ago
Anytime OJ.. anytime... I makes my heart happy to bring joy to folks... =0)

Thinking of taking on some debt, especially major debt?

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