How much debt do you have? Let's talk credit cards and student loans.

[spender]

How much are you in debt ? I'm talking about credit card,students loans etc.
I have 0 debt, from every paycheck I try to save at least 2/3.Whenever I buy plane ticket using credit card I pay at once full amount back.
How about you people ?

 

[mattmns]

Currently 0.

 

[franznietzsche]

How much are you in debt ? I'm talking about credit card,students loans etc.
I have 0 debt, from every paycheck I try to save at least 2/3.Whenever I buy plane ticket using credit card I pay at once full amount back.
How about you people ?

$2250 in student loans.

 

[brewnog]

About £10,000 (GBP), probably around 15k by the time I finish. What's that, about USD 25,000?

 

[Moonbear]

Well, there's the mortgage on the house and about a year's worth of car payments (I'm not disclosing the amounts). Until I bought my car and house, I had no debts, and I continue to avoid having any debt aside from those.

 

[brewnog]

Well, there's the mortgage on the house and about a year's worth of car payments...

I don't have car debts ner ner ne nerr nerr!

 

[franznietzsche]

Until I bought my car and house, I had no debts, and I continue to avoid having any debt aside from those.

I have a credit card, but i avoid using it as much as possible, and always pay it off immediately. Basically i only use it when i have to order something online, that i already have the cash for anyway. Not worth building up debt early in life.

 

[Grogs]

Maybe $150K. I'm working to get it up over $1 million though.

 

[Moonbear]

I have a credit card, but i avoid using it as much as possible, and always pay it off immediately. Basically i only use it when i have to order something online, that i already have the cash for anyway. Not worth building up debt early in life.

I learned early on that you should use your credit card instead of cash as often as is possible -- as long as you pay off the bills right away. It helps you build up a good credit rating, so when you do need to get a loan for something big, like a car and house, you have a good credit history established. I've known people who always paid everything in cash and then wound up needing a co-signer to buy a house, not because they couldn't afford it or weren't responsible borrowers, but because they had no credit history. I know it sounds crazy, but that's the way lenders think.

 

[JasonRox]

I learned early on that you should use your credit card instead of cash as often as is possible -- as long as you pay off the bills right away. It helps you build up a good credit rating, so when you do need to get a loan for something big, like a car and house, you have a good credit history established. I've known people who always paid everything in cash and then wound up needing a co-signer to buy a house, not because they couldn't afford it or weren't responsible borrowers, but because they had no credit history. I know it sounds crazy, but that's the way lenders think.

That's so true.

 

[JasonRox]

Deleted.

I deleted it.

 

[brewnog]

With credit cards, you also get a lot more buyer protection too (if a supplier goes bankrupt, for example, the card company will refund your purchase because they're nice like that). Set up a direct debit, and it's just like using your debit card!

 

[russ_watters]

I have a nasty habit of holding a little credit card debt - but not too much, just $1000 or so. Other than that, just my car (8 months into a 5 year loan). But I'm hoping to go another $150-$200k into debt within the next year.

 

[Moonbear]

I have a nasty habit of holding a little credit card debt - but not too much, just $1000 or so. Other than that, just my car (8 months into a 5 year loan).

Let me guess, cameras and telescope type equipment?

But I'm hoping to go another $150-$200k into debt within the next year.

Ah, the joys of buying a house! I remember that slightly panicky feeling the night before closing on the house, thinking what on Earth am I doing getting myself into that kind of debt when I had never been in debt my whole life! But, it still beats living in an apartment.

 

[member 5645]

15,000 student loans.
1,000 credit card debt (I revolve this. It never goes higher than this number, or I just pay it down, so 1000 I say)
12,000 car loan
------------------

Wooh, another couple of years and I can figure out how to finance med school on top of all this too, wooh!

 

[spender]

Ah, the joys of buying a house! I remember that slightly panicky feeling the night before closing on the house, thinking what on Earth am I doing getting myself into that kind of debt when I had never been in debt my whole life! But, it still beats living in an apartment.

What is the deal here in America with buying a house,seams like everyone must own a house even if person gets into financial black hole for the rest of their life, and if you loose your job you are screwed.
In Europe lots of people just live comfortably whole life in rented aprtments and no one is complaining.

 

[Moonbear]

What is the deal here in America with buying a house,seams like everyone must own a house even if person gets into financial black hole for the rest of their life, and if you loose your job you are screwed.
In Europe lots of people just live comfortably whole life in rented aprtments and no one is complaining.

You're not in a financial black hole for the rest of your life, just 30 years. If you lose your job, you still have the house to sell, which is better than if you are renting. Houses are good investments, because they usually appreciate in value, so instead of just paying rent and never owning anything, you buy a house and gain equity. Now, it doesn't make sense to buy a house that would require mortgage payments that are higher than you can afford, but I have a 4 bedroom house with a mortgage payment (principle + interest) that's actually a little less than what I was paying in rent for a 2 bedroom apartment, and in just three years, my house has increased in value by about 20% (and I'm in a neighborhood where houses are more stable in value than other areas where homes have doubled in value in the past few years).

 

[franznietzsche]

I learned early on that you should use your credit card instead of cash as often as is possible -- as long as you pay off the bills right away. It helps you build up a good credit rating, so when you do need to get a loan for something big, like a car and house, you have a good credit history established. I've known people who always paid everything in cash and then wound up needing a co-signer to buy a house, not because they couldn't afford it or weren't responsible borrowers, but because they had no credit history. I know it sounds crazy, but that's the way lenders think.

That is actually the only reason i have the card at all. But i still stick to internet purchases with it. Although, its not like i spend much money anyway. Well...not directly at least.

 

[franznietzsche]

What is the deal here in America with buying a house,seams like everyone must own a house even if person gets into financial black hole for the rest of their life, and if you loose your job you are screwed.
In Europe lots of people just live comfortably whole life in rented aprtments and no one is complaining.

House payments are not usually drastically higher than rent payments(the difference you don't typically have roommates splitting a house payment). At least, not in what I've seen. When we rented out our house, we basically rented at what the mortgage payments were (a little higher actually, since property values had gone up in the six years since we bought it). So if you lose your job, you would be equally screwed either way. Well, actually no, you'd be less screwed owning the house, since presumably, if you'd been paying on it for a while, it would be worth more than you owed, so you would profit if you had to sell. Renting, you'd just lose the apartment and have nothing to show for it.

 

[Moonbear]

House payments are not usually drastically higher than rent payments(the difference you don't typically have roommates splitting a house payment). At least, not in what I've seen. When we rented out our house, we basically rented at what the mortgage payments were (a little higher actually, since property values had gone up in the six years since we bought it). So if you lose your job, you would be equally screwed either way. Well, actually no, you'd be less screwed owning the house, since presumably, if you'd been paying on it for a while, it would be worth more than you owed, so you would profit if you had to sell. Renting, you'd just lose the apartment and have nothing to show for it.

All true. Plus, once you buy your house, your payments remain the same for the rest of your mortgage term (assuming you get a fixed rate mortgage). You can also refinance if interest rates go down to lower your payments. That means that when property values keep going up and rent keeps going up every year, your mortgage remains the same, so over your lifetime, you pay far less than if you're dumping that money into ever increasing rent. (Yes, taxes and insurance rates continue to go up, but you're paying for them in your rent too; if the taxes go up, you can bet your landlord will raise rent when it's time to renew your lease).

 

[Grogs]

There's actually nothing wrong, per se, with having debt. Credit is one of the greatest economic tool ever developed, allowing people to buy things they'd have to save up their whole life to buy otherwise. Having a large debt may make you nervous, and that's a good thing. It's a powerful tool and it needs to be treated with respect.

All credit is not created equal though. Paying 26% on a huge credit card bill or 119% on a title loan is a good way to end up bankrupt, but other sources of debt may not be bad. For example, if you're paying 0% on your credit card bill, there's no** reason to pay it off before the initial period ends. A home mortage is even better: It's a relatively low interest rate; it's attached to something that has value (i.e., the house); and you can deduct the interest, depreciation, and upkeep from your taxes, offseting a large part of the interest you pay into the house. If you look at some of the richest men in America like Donald Trump or Bill Gates, I suspect you will find they have millions or possibly billions of dollars of real estate debt.

**No financial reason. If you suspect you may spend the money before the grace period ends, that's a good reason.

 

[Mk]

Where's tribdog? I figured he'd post like crazy over here? Maybe he's too busy throwing up from the gum?

 

[tribdog]

I owe about $180,000 in hospital bills, no joke, which I will never pay. I just hope they don't show up someday and put the knife back in.

 

[franznietzsche]

I owe about $180,000 in hospital bills, no joke, which I will never pay. I just hope they don't show up someday and put the knife back in.

That would be bad if they did so.

Funny, but bad. Well, funny in a rather morbid sense.

I'll stop now.

 

[Mk]

Man, those scapels are mad sharp... I remember in biology, cutting through my glove farily deep into my finger, but the incision was like as thick as a paper cut.

 

[russ_watters]

Let me guess, cameras and telescope type equipment?

And computers/parts, an Ipod, etc. Yeah, I'm a gadget guy. (next up - GPS and a pair of binoculars with an integrated digial camera)

Quick note about my credit card: I have USAA, which is a military-only credit union and a really good deal. I pay 9% on my credit card. (and get this - they refund me other banks' atm fees! )

What is the deal here in America with buying a house,seams like everyone must own a house even if person gets into financial black hole for the rest of their life,

As usual, spender, you are falling for popular perceptions that are not reality. The reality is, especially with today's interest rates, that owning a house is typically slightly cheaper than renting one of the same size. My roommate owns the 3bedroom, 2 bath condo we live in and it costs ~$1000/mo (mortgage and condo association fee) vs roughly ~$1200 if he was renting it. And with owning, in a relatively short period of time, you own something (equity is basically an inverted loan to yourself).

...and if you loose your job you are screwed.

Wrong. If you lose your job, you are in a better position than someone who is renting: you own something you can sell to get money to rent something. If you're renting and you lose your job, you're screwed - you have no money to pay your rent.

And after ~30 years, you end up with pretty extreme financial independence: once you pay off your mortgage, your cost of living drops dramatically.

 

[ray b]

And after ~30 years, you end up with pretty extreme financial independence: once you pay off your mortgage, your cost of living drops dramatically.

I avoided that trap
I never wanted to pay 3 times the cost of a house via time payment traps

every thing I own , like my dad taught me, was paid for in CASH inc houses
cars boats ect
I lived in a trailer THAT I PAID CASH FOR intill I could afford a boat to live on and only got a house when I could pay for it

so not a single time payment EVER
esp as the banks want you to pay for INSURENCE an other RIPOFF

 

[Monique]

In Europe lots of people just live comfortably whole life in rented aprtments and no one is complaining.

Indeed, but many of my friends are buying their own house now. I don't know if I will, here in Holland you pay tens of thousands of euros over the actual value.. on the other side: the interest is at its historical lowest point.

I don't know if they ever will (house prices are over-rated since WOII), but I think that the house prices will drop in the near future.. I hope.

 

[Moonbear]

And computers/parts, an Ipod, etc. Yeah, I'm a gadget guy. (next up - GPS and a pair of binoculars with an integrated digial camera)

That's what I figured. You like the expensive toys. Like the old adage, you can tell the men from the boys by the price of their toys.

Quick note about my credit card: I have USAA, which is a military-only credit union and a really good deal. I pay 9% on my credit card. (and get this - they refund me other banks' atm fees! )

Aww, gee, wish I could get my hands on one like that. I just opt not to carry a balance. It's funny, because that makes me a good customer, but don't good customers cost credit card companies money? Afterall, they aren't making any profit from interest on my account. I've never understood how they can make any money from good customers who don't carry a balance. Or maybe that's why they keep raising my limits, in the hope one of these days I'll be tempted by that to spend beyond my means.

Though, when I make large purchase, like furniture, I wait for the no interest for a year type financing. I know it's a better strategy to wait until the end to pay it, but I'm more comfortable just paying a little bit every month so I don't get caught short at the end. Of course, it's rather funny that now I'm applying for new jobs, so need to start thinking about getting the house looking good to sell hopefully in a few months, so I'm suddenly stepping up the furniture purchases, all so I'll have to move it, but I know I'm not going to get top dollar for the house if I have it furnished with card tables and folding chairs...it's amazing how much something like decorating can add to the selling price of the house, even though I'm taking it all with me! Well, I also have picky taste, so it really has taken me two years to find a coffee table I like (just bought one yesterday...yay!). Meh, I'll stop rambling now.

 

[russ_watters]

I avoided that trap
I never wanted to pay 3 times the cost of a house via time payment traps

every thing I own , like my dad taught me, was paid for in CASH inc houses
cars boats ect
I lived in a trailer THAT I PAID CASH FOR intill I could afford a boat to live on and only got a house when I could pay for it

so not a single time payment EVER
esp as the banks want you to pay for INSURENCE an other RIPOFF

That's pretty rare to be able to do that - most people just rent and pay 3x the purchase price for an apartment they never own.

Though, when I make large purchase, like furniture, I wait for the no interest for a year type financing. I know it's a better strategy to wait until the end to pay it, but I'm more comfortable just paying a little bit every month so I don't get caught short at the end.

Yeah, me too (except for electronics, not furniture) - I'll get a credit card for that, pay it off in 4 months, then cut up the card.